UKEnginSkillsNeeds PDF

SKILLS DIALOGUES: LISTENING TO EMPLOYERS
An Assessment of Skill
Needs in Engineering
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Skills Dialogue
A comprehensive summary from employers of skills requirements

in engineering
Research undertaken by
Helen Connor
Sally Dench
Peter Bates
THE INSTITUTE FOR EMPLOYMENT STUDIES
Mantell Building
Falmer
Brighton BN1 9RF
UK
Contents
The Institute for Employment Studies ii
Contents iii
Skills Dialogues - introduction v
Preface to Engineering Skills Dialogue vi
Executive Summary vii

Overview vii
Engineering demand - a changing but diverse picture vii
A change in skill needs too ix
Is supply adequate? ix
Skill deficiencies x
Conclusions xi
1. Introduction 1
Scope and main focus 1
Engineering and the economy 3
Economic and business trends 3 iii
Principal drivers of change 6
Importance of diversity 7
2. Demand for Engineering Skills 8

Current employment 8
Employment trends 9
Employment forecasts 11
Employment pattern 14
Changing occupational balance 14
Reasons for occupational shift 15
Skill trends 16
Specific occupational skill changes 19
3. Supply of Engineering Skills 21

Stocks of qualified people 21
Participation in formal education 23
Further education 24
Higher education 26
Training programmes 30
4. Recruitment and Skill Deficiencies 33

Historical overview 33
Recruitment and vacancies 33
Recruitment difficulties 34
Pay levels 40
Skills required 42
Impact of recruitment difficulties 44
Skill gaps 45
Impact of skill gaps 49
Looking to the future 50
Appendix 1: Contributing Organisations 52
Appendix 2: References and Data Sources 54
Appendix 3: Additional Tables 57
iv
Skills Dialogues – General Introduction

Skills Dialogues constitute a series of consultations with all major industrial and
business sectors, leading to the production of high quality authoritative skills assessments
for each of these broad sectors. Dialogues developed from recommendations in the
2nd Report of the Skills Task Force, Delivering skills for all, as a means of providing
better quality information on changes in skills supply and demand at a sectoral level.
They draw on research undertaken by National Training Organisations (NTOs) through
Skills Foresight and other projects as well as a wide range of national research on
current and future skills needs. Recognising the UK remit of NTOs the dialogue reports
reflect the UK perspective as far as possible, although not all the available evidence
which underpins the Dialogues is UK wide. Typically, the reports do not provide a
region by region analysis but they do attempt to illustrate any major regional
differences. The Skills Dialogues operate as a rolling biennial programme with the first
full series of reports due to appear between Autumn 2000 and the end of 2001.
The purpose of the dialogues is to improve the quality of skills information available at
a sector level, and to provide an effective voice for NTOs and employers in their sectors
in the planning and implementation of education and training provision and in
informing careers advice and guidance. They will ensure that industry sector views are
well articulated and represented to major stakeholders, such as the new Learning and
Skills Council (LSC) and its local arms, Regional Development Agencies (RDAs) and
v
careers services. The dialogues are designed to draw on the work of individual NTOs
but to cover broader industrial groupings, so as to aid strategic planning and make the
information base more manageable.
The assessments produced through the dialogues will also directly contribute to Sector
Workforce Development Plans, as the evidence on skill needs will underpin proposed
action and influence the nature of relationships with key partners. These plans will form
a strategic statement of NTOs’ proposed activities, relationships with partners and
stakeholders and targets for achievement.
Each report results from a process of consultation with the main organisations in the
sector to identify the key issues, and a wide ranging analysis of existing material on
skills supply and demand, and factors influencing skill trends. The evidence includes
sector specific analysis from the recent national research conducted on behalf of the
National Skills Task Force including the Employer Skills Survey (ESS) and Projections
of Employment and Qualifications by the Institute for Employment Research as well as
the NTOs’ own Skills Foresight research. The material is brought together into a draft
discussion document for a national seminar, which involves all the key interests in
the sector, such as employers, NTOs, Further and Higher Education planning, funding
and qualifications’ bodies, trade unions, professional associations and government
departments.
The final report takes on board the comments from all those involved in the Dialogue
and provides a comprehensive analysis of the skill needs and an authoritative statement
about skills trends in the sector. We hope they will be useful to policy makers and
planners in other parts of the United Kingdom. For example, a series of skills monitoring
and forecasting exercises are being undertaken in Northern Ireland and the work on
this and other Dialogues will inform the Northern Ireland research.
Foreword
As the representative National Training Organisations for the engineering sector, we
welcomed the recommendations from the National Skills Task Force to set up a
programme of skills dialogues across the major industrial and business sectors,
provided the reports reflected the views of those in the sector. We felt that the skills
dialogues could bring valuable information and new insights on skills to those planning
education and training provision.
This report has been developed as a partnership between NTOs, their employers, and
Government, but has involved discussion with a wide range of partners, including some
of the funding and planning bodies who will benefit from this information. It has
brought together a wide range of information, including the research that we as NTOs
have carried out along with new data on current and future skills needs in the sector.
The result is a detailed and thorough assessment of the current and projected skill
needs in engineering, which will be a valuable source of information for both planners
and careers and information services.
With changes underway in post-16 education and training, it is important that NTOs
and our employers work closely and effectively with both the Learning and Skills
Council, once it starts work in April 2001, and with the Regional Development
Agencies.
vi
We hope that the Dialogue report, together with our own Skills Foresight reports will
provide a valuable tool for all those involved in planning education and training
provision to meet current and future skill needs in vital engineering occupations.
Engineering and Marine Engineering Construction Industry

Training Authority Training Board
Executive Summary
Overview
q Despite the long-term decline in much of engineering manufacturing, there
continues to be strong demand for engineering skills in the UK economy, especially
in the fast-growing electronics and telecommunications industries. A number of
engineering employers are experiencing difficulties in filling vacancies, mainly
because of a shortage of people with relevant skills and experience. Skill shortages
are apparent at all levels but especially at the higher end of the occupational
spectrum, among professional engineers, and also in skilled (craft) trades, including
electronics and IT skills. The main skill gaps are in specific technical and practical
skills areas but personal and generic skills are also in short supply.
q These are some of the key messages produced by the Engineering Skills Dialogue
and presented in this report. The Dialogue is principally concerned with the
demand and supply of skills in the engineering industry, though it also addresses
engineering skills across the economy, but not in as much depth. It is recognised
that the representation of engineering skills outside of the engineering industry is
growing and that some of the issues relating to demand and supply of engineering
skills in other sectors may be different from those in engineering manufacturing.
This Dialogue provides some information on the broader picture but because of a
lack of detailed statistical information in places, does not provide a full analysis. vii
Also, there are noticeable differences between different engineering occupations
and different engineering sectors, for example between electronics and mechanical
engineering, which mean that specific supply and demand issues have more
significance to some parts of the engineering industry than to others.
Engineering demand - a changing but diverse picture

q Engineering skills are required across the UK economy in a variety of sectors and
are used in many and diverse ways. It is estimated that around 2.5 million people
are in occupations that have some engineering component, about half of whom
(1.3 million) are in substantially engineering occupations. The majority of those are
found in engineering manufacturing, though a number of other sectors have
substantial numbers.
q The engineering industry as a whole has shrunk and, at the same time, experienced
enormous structural change over the last few decades. One and a half million jobs
have been lost since 1971, though the rate of decline slowed during the 1990s
and a small increase of five per cent was seen between 1995 and 1998. It is now
a ‘leaner but fitter’ industry, and both productivity and output have been increasing
in the 1990s. Despite all the upheaval it has experienced, engineering continues
to make a significant contribution to the UK economy and to exports in particular.
q The shape and structure of the industry has changed in many ways which have
implications for skills. There has been a shift in the occupational balance towards
the more highly-skilled and educated. Jobs have become more demanding at all
levels, and there is an increased use of cell and team working. There are now
fewer large firms because of downsizing and more out-sourcing. Small firms in
supply chains are taking on more responsibility for higher-level and more complex
work, which in turn is changing their skill mix and relationships with suppliers and
customers. The trend towards mergers and the internationalisation of many large
engineering businesses mean that operational and investment decisions are now
taken more at a global level.
q While there has been a lot of change there has also been continuity: the industry
remains predominantly male, with very little part-time working or self-employment,
and this is not expected to change much in the foreseeable future.
q Engineering is a world of contrasts. It comprises one of the fastest growing and

best performing sectors of the UK economy (the electronics sector) and also one of
the weakest performers (the metals manufacturing, moulding and fabrication
sector). The skill requirements and pattern of employment of electronics are
notably different from those of many other engineering sectors. So too is the
pattern in the engineering construction industry with its increasing focus on
managing contractor organisations. Different engineering sectors are subject to
different pressures, which in turn have implications for skills. Analyses of overall
trends can mask important differences.
q At a regional level, there are also considerable contrasts due to the varying
composition of engineering, in terms of sectors, size breakdowns and occupation
patterns, though all regions have some representation of all sectors of engineering.
viii Key issues of strategic importance for engineering at a regional level, and priorities
for regional organisations, will therefore vary accordingly.
q While, overall, engineering employment levels are broadly stable at present, the
future is less optimistic on the whole. A reduction of 13 per cent in employment
levels in the engineering manufacturing sector is forecast between 1998 and 2004.
This will be felt differentially across the sector, and some sectors, such as
electronics, are likely to continue to grow. In the wider economy, employment of
engineering professionals is forecast to grow by over two per cent per annum to
2009 while a two per cent annual reduction is forecast in the employment of
engineering craft and metal working skilled trades.
q However, despite these downward trends overall, there will continue to be a

strong demand for training and job opportunities in engineering, as estimates
of ‘replacement demand’ (ie to replace workers leaving due to retirement,
career change, etc.) outweigh the negative expansion demand forecasts at all
occupational levels. Some of the largest numerical net requirements to 2009
in occupations of relevance to engineering are forecast to be in the corporate
manager, science and technical professional and skilled metal and electrical
trade groups.
A change in skill needs too

q A number of drivers of change are acting in unison to change skill requirements in a
range of jobs. These include the increased use of technology, new materials and
new processes throughout industry, an increasing emphasis on customers and
meeting their requirements, new working practices, and the globalisation of many
aspects of business. These demand higher-level skills and education, and also
greater breadth of skill and greater flexibility in the applications of skills.
q A range of new and specific technical skills is required to meet the demands of
technology and of the business, but also of importance is the greater emphasis
employers put on personal and generic skills in all work areas. The key role of
managers and supervisors, and the importance of their generic skills, are
increasingly being recognised, though perhaps not sufficiently within many small
firms. The role of line manager/team leader has become increasingly critical, and
requires a different mix of skills (both technical and communication skills).
q Companies are having to change their skill mix, through upskilling of existing
employees and recruiting at higher levels, at a time when some are experiencing
job losses in areas where more traditional skills have been deployed. Several
issues have been identified in the Dialogue as needing to be addressed including:
q the ability of the education sector to meet this need in terms of producing
the ‘raw material’ that industry requires ix
q the ability of engineering to attract the highly qualified people it needs through
offering appropriate employment packages, training schemes and satisfying
career opportunities
q the development of the qualifications framework further, especially at NVQ

Level 3, to help meet industry’s needs better at the intermediate level.
q While a lot of change is happening there is also continuity, and though declining,
craft skills continue to be needed (in large numbers), along with the underpinning
knowledge that goes with them.
Is supply adequate?
q The number of engineering employees who hold a vocational qualification or at
least a GCSE Grade C has risen significantly over the last decade, and now
represents over 80 per cent of the engineering industry’s workforce. This compares
with 66 per cent in 1988. There were 46,000 NVQ awards made in engineering
in 1998/99, a growth of 80 per cent over the previous five years. Annual output of
first degree graduates in engineering and technology is just over 22,000, a similar
level to 1995 though substantially higher than in 1988.
q International comparisons show that, despite the growth in output from further and
higher education, the UK is still deficient numerically at the intermediate level,
though on a par with most countries in terms of university engineering graduate
output.
q While the supply of qualified people in engineering has been growing over the last
decade, engineering has clearly not been getting its share of the growing student
population. Engineering also has had problems in attracting people of sufficient
calibre onto Modern Apprenticeship programmes. Several reasons lie behind these
supply problems, including:
q a failure to attract enough of the right quality of young people to study

engineering, partly due to a poor image
q a declining interest in taking maths and physics at ‘A’ level

q continuing low take-up by women on engineering courses
q attractions of alternative options (especially studying IT)
q more encouragement given to young people to stay on at school than
to follow vocational routes which involve workplace training.
q Engineering is also criticised for not developing personal and transferable skills
sufficiently among graduates, losing too many of the most able students to other
jobs (eg in IT, the City) and also failing to utilise some of the engineering graduates
appropriately and develop their skills.
q Although a number of changes have been introduced to improve engineering

x education and put more emphasis on broadening skills and flexibility of provision,
more could be done, for example in improving work placement opportunities
available to graduates and undergraduates. However, an issue identified as having
a negative effect on the quality of higher education is the difficulty many
universities face in recruiting young engineering staff.
q In-company training activity is varied: half of small engineering firms do not provide
any training to their employees; and engineering employees at higher levels are
more likely to receive training from their employers. The main barriers perceived by
employers to providing more training are cost and access.
Skill deficiencies
q The evidence from engineering employers shows that significant numbers have
problems filling vacancies due to a shortage of people with relevant skills and
experience, and that there are also areas of skill deficiency within the existing
engineering workforce. These are at a range of levels, though more so in the
higher skill occupations where demand is much greater.
q It is estimated that around one in six engineering employers have hard-to-fill

vacancies and these are found more commonly in the engineering areas: craft,
technician, professional and managerial occupations. Two-thirds of all vacancies
at craft and skilled operative level are hard-to-fill ones, as are over half of all
vacancies at engineering professional level. Particular areas of difficulty identified
include: design engineers, CNC programmers, electrical engineers, fitters, pattern
makers and CNC setters and operators.
q Difficulties are greater for engineering firms in filling vacancies at engineering

professional level and in some engineering craft trades than for firms in the wider
economy, with the exception of the construction industry which has the greatest
difficulties. However, recruitment difficulties in engineering are more likely to be
due to a shortage of people with the relevant skills and experience than to other
reasons. Three-quarters of the hard-to-fill vacancies in professional and technical
occupations reported by engineering employers were due to skill shortages.
q Within engineering, electronics has greater recruitment difficulties at professional

engineer level and in electrical and electronic trades than other engineering sectors,
though the picture is more similar in respect of shortages in other occupations.
q Engineering employers find it more difficult to recruit people with technical and
practical skills than other skills. These technical skills cover a wide range and often
fairly generic terms are used, eg electrical, design. Limited evidence is available
which explores the nature of these difficulties in detail. It would be beneficial in
helping to understand more about skill gaps and their causes if they could be
unpacked more, at a sectoral or local level.
q Other areas of skill shortage are in generic and interpersonal skills, again covering a
wide range. For technicians, IT and software skills are frequently mentioned,
while among managers there appear to be difficulties finding people with good
management skills. For craft, manager and sales occupations, communications
xi
skills are a problem.
q Skill deficiencies in the existing engineering workforce are also evident, in particular
in the engineering occupations cited above as causing recruitment difficulties. One
in four engineering employers considers there is a gap between the skills of their
current workforce and those needed to meet their business objectives. The nature
of these skill gaps also mirrors those experienced in recruitment difficulties, with an
emphasis on practical and technical skills, but the personal and generic skills are
also mentioned. In particular, people management skills are seen to be very
important at all levels and it is here that deficiencies are commonly reported.
q Finally, skill deficiencies impact on engineering companies in different ways:

primarily in the bringing of new products to market, and developing businesses, but
also in their ability to meet customer service and quality objectives and operating
costs. Around one-quarter to one-third of engineering employers are experiencing
difficulties of these kinds because of skill deficiencies in their employees.
Conclusions
These findings have wide-ranging implications, many quite detailed and specific to
particular sectors or skill levels. However, there are some important conclusions for
engineering as a whole:
q There is a continuing, substantial need for training provision in engineering. Despite

the long-term decline in much of the sector, there continues to be strong demand
for engineering skills.
q Within the broad picture, though, provision needs to match changes in demand,
reflecting for example, the growing demand at engineering professional level and in
electronics and telecommunications. However, even where employment is falling,
such as in craft and lower-skilled occupations, replacement demand (to replace
those retiring or changing careers) is strong. There is no justification for reductions
in the overall level of provision.
q It is important that course content, curriculum and qualifications reflect the way
skill needs are changing. A range of new and specific technical skills are required
but education and training provision needs to reflect also the importance employers
attach to personal and generic skills in all areas of engineering. This applies both
to initial training of new recruits to the industry and to upskilling needed by those
already working in it.
This has clear implications for publicly funded education and training and for providers.
However, the industry itself needs to respond - for example, by improving work
placement opportunities, by improving in-company training (particularly in small firms)
and by continuing to work on improving the attractiveness of the industry.
xii
Introduction
1.1 This report, prepared by the Institute for Employment Studies, is the result of the
Engineering Sector Skills Dialogue. It provides an assessment of trends in employment
and skill needs, and associated issues in the engineering sector and is the second in a
series of reports that will be published up to the end of 2001.
1.2 The report has brought together, research and evidence from a wide range of institutions
involved in engineering and draws on national data, including the new Skills Task Force
Employers’ Skills Survey (ESS) and the Institute of Employment Research (IER)
Projections of Occupations and Qualifications. It is principally concerned with the
demand and supply of skills in the engineering industry, however it also addresses
engineering skills across the economy, though not in as much depth. Some of the
issues relating to engineering skills in other sectors are different from those pertaining to
the engineering sector. This Dialogue provides some information on the broader picture
but does not provide a full analysis, mainly because there is considerably less available
information on the demand for engineering skills outside of the engineering industry.
1.3 The Dialogue has built on existing labour market research and skills information on
engineering that is collected regularly and used by a range of organisations, rather than
undertake any new research. The working paper was discussed at a national seminar,
held on 15th May 2000, involving the relevant NTOs, employers, professional bodies,
funding agencies, RDAs, representatives of further and higher education and Government 1
Departments. This final report takes in to account comments received as a result of the
seminar and from others involved in the consultation.
This introductory chapter provides details of the scope and coverage of the Engineering
Dialogue and introduces the context, main economic trends and other factors of
influence on engineering skill requirements. Discussion of the evidence on trends in
demand is presented in Chapter 2, on the supply and availability of skills in Chapter 3,
and on the main demand-supply imbalances in Chapter 4.
Scope and main focus

1.4 Engineering skills are represented in most sectors of the economy and are used in
many and diverse ways - from the manufacture of a wide range of goods to supporting
business and communications infrastructures, public health and defence. The principal
NTOs with responsibility for engineering occupations are the Engineering and Marine
Training Authority (EMTA), whose scope covers engineering manufacturing (employing
around 1.75 million people) and the Engineering Construction Industry Training Board
(ECITB), which covers the design, construction and maintenance of plant of various
kinds (employing around 40,000 people). Within engineering manufacturing there are
distinct sectors, including electronics and telecommunications equipment and
components, aerospace, motor vehicle production, mechanical engineering and
foundries. In addition, there is a large number of other NTOs (at least 25) which have
an interest in engineering skills, the main ones being: the Rail Industry Training Council
(RITC), nto tele.com, Electricity Training Association, PINTOG (covering chemicals and
processing industries), CITB (construction), ITNTO and e-commerce NTO, and Skillset
(covering the TV and film industries).
1.5 Figure 1.1 illustrates this breadth of engineering employment by showing the
distribution of people employed in recognised ‘engineering occupations’. While it is
acknowledged that a large number of occupations have some engineering component
(eg electricians, gas fitters), those included in Figure 1.1 are occupational groups
identified in the Standard Occupational Classification (SOC) coding system as
substantially engineering occupations, namely - professional level engineers and
technologists, engineering technicians, engineering craft trades and machine
operatives/assembly workers (further details of these are shown in Table A3.1 in
Appendix 3). Taken together, these occupational groups make up 1.3 million out of an
estimated engineering population (if all jobs with some engineering focus are included)
of around 2.5 million (source: OSC Eng, 1998). The largest proportion of them (58
per cent) is found in engineering manufacturing, but a range of other sectors employ
substantial numbers, in particular the services sectors (eg IT, communications, public
services, utilities). The latter includes technical or engineering consultancies, and
specifically managing contractors working on engineering construction projects (which
fall under the scope of the ECITB).
Figure 1.1: Distribution of engineering employment
58% Engineering manufacturing

14% Other manufacturing
2
7% Computer & business services
3% Public
4% Construction
2% Utilities
12% Other services
Source: LFS, 1999
1.6 Engineers at professional level are even more broadly spread, with a lower proportion
in engineering manufacturing (44 per cent) and a higher proportion in the services
sector, and computer and business services in particular (almost one in five). This is
also reflected in the Engineering Council’s membership statistics where just 25 per
cent of the registrants are employed in manufacturing industry1.
1.7 This Dialogue has aimed to cover the main sectors where engineers are employed;
however, as mentioned above its main focus is on the engineering manufacturing and
engineering construction industries, and their component parts (eg electronics). Some
of the issues and conclusions arising from the evidence presented in the report are of
relevance to engineering in a wide sense, while others relate specifically to the situation
in the engineering sector. Skills issues in other sectors, including engineering skills, are
likely to be discussed also in other Dialogue Reports (eg construction, processing
industries, transport and information and communications technologies (ICT)).
1 Note that the Engineering Council’s registrants include a wide range of disciplines and because membership is
voluntary include only part of the total population. The data shown in Figure 1.1, based on the Labour Force
Survey, and the Engineering Council data are not compatible.
Engineering and the economy

1.8 Engineering has traditionally occupied a major role in the UK economy, and continues
to do so despite a decline in the traditional manufacturing sector. This is because, as
seen above, engineering skills are utilised throughout the economy and, in particular,
are key to the development of technology-based industries and services.
q Total engineering industry output is valued at around £55 billion, representing eight
per cent of total UK GDP (Wilson, 2000). This accounts for more than one-third of
total UK exports, with mainland Europe the main destination (EEF, 1999).
q Specific engineering sub-sectors are among the best performing UK industries: eg

electronics output, which has grown massively in the 1990s, now represents one of
the largest manufacturing sector outputs (more than £30 billion). It also provides
significant exports (16 per cent of the UK’s total in 1996) (ITCE SSG, 1999).
q Engineering contributes to the success of a range of other industries in, for

example, the development of IT services and communications, new digital
technologies in broadcasting, medical research, and the development of the
financial systems infrastructure of the City. It is impossible to quantify this wider
impact of engineering on the UK economy but it is significant and expected to
increase as the pace of technology and innovation increases and applications
become more widespread.
3
Economic and business trends
Historical perspective
1.9 Over the last two or three decades, the engineering manufacturing sector as a whole
has shrunk considerably. Large scale factory closures and downsizing, a consequence
mainly of the effects of two major recessions, in the early 1980s and again in the
early 1990s, have led to the loss of over 1.5 million jobs in engineering since 1971.
These losses have been felt more in the country’s old industrial heartlands in
particular, parts of the North West, North East, Midlands and Central Scotland. They
have also hit more at lower skill levels (discussed further in Section 2.5) and in the
traditional metals manufacture and mechanical equipment sectors.
1.10 The contrast between the newer, technology based, and the older traditional industries
is an important one. For example, output in the electronics sector grew by 62 per
cent between 1990 and 1998, compared with a fall of 4 per cent for manufacturing
as a whole (ITCE SSG, 1999). Electronics has also benefited from major inward
investment by foreign companies and from strong world market growth, in particular
the European market for PC products in the 1990s. Although parts of electronics
have suffered from some volatility (in particular the semi-conductor industry), overall,
electronics has shown much stronger growth than the rest of engineering during the
1990s. The UK aerospace sector has also been much stronger economically than
other parts of engineering. The IT and business services sectors, which employ
substantial numbers of software, electronics and computer engineers, have been one
of the main growth areas in the UK economy, with the IT services sector alone
doubling its contribution to GDP since 1990 (ITNTO, 1999).
1.11 Alongside these overall trends have been enormous structural changes within
engineering manufacturing companies due to the development and application of new
technology in processes and in products, putting pressure on both investment and the
need to re-skill and manage change effectively. Also, as in many other developed
nations, international competition and the development of global businesses has had a
serious impact.
1.12 The engineering construction sector has also been affected by similar trends -
international competitiveness, the need to control costs and improve response times,
and the impact of new technology (in particular ICT). Most important has been the
trend for large client companies to downsize, and outsource more work, especially
more repair and maintenance activities, to contractor organisations, and more recently
some of the operations work also. There has been a noticeable increase in smaller
repair and maintenance contracts in contrast to the decrease in large engineering and
construction projects. Political factors have also had an influence, including
Government energy policy, maturity of the North Sea oil market, the price of oil, and
health and safety issues.
Current picture
1.13 The engineering industry is now seen as being considerably ‘leaner and fitter’ than it
was two decades ago, and on the whole more stable economically. In terms of GDP,
output has grown by 45 per cent since 1981 but productivity (GDP per head) has
more than doubled, from a figure of 14.25 in 1981 to 30.28 in 1998. Various
4
business surveys in 1999 showed a relatively stable situation overall, but they also
highlighted continuing difficulties for many employers, especially in export markets.
The strength of sterling is a major negative factor on which the recent spate of
redundancies and of job losses in major car plants have been blamed. According to
the EEF (4th Quarterly report, 1999)
‘the engineering sector has turned the corner but recovery has yet to show any real
strength … demand remains fragile and prospects uncertain.’
The situation in early 2000 appears to have deteriorated, with output in engineering
reported as falling in the first quarter (EEF, 2000).
1.14 There is also sectoral diversity: a North-South divide in new orders was reported in
1999, and also much stronger order books for the electronics and electrical
equipment and automotive sectors at that time (EEF, 1999), though for the latter the
situation has noticeably changed. Electronics employers (FEI) also confirm the
stronger economic conditions in the electronics sector.
Future outlook
1.15 Domestic demand is expected to strengthen in 2000 leading to a small growth in
engineering manufacturing output (1.8 per cent). This is despite the expected
continuing adverse effects of a strong pound. Overall figures, however, once again
mask different trends between engineering sectors. The mechanical, metal goods and
motor vehicles sectors are all expected to contract in output between 1999 and
2000, but recover a little by the end of the year (EEF, 1999), while electronics will
continue to push ahead.
1.16 Looking further ahead, according to IER macro-economic forecasts (Wilson, 2000):
q The engineering sector will continue to recover, but led by growth in electronics, and
driven by technological change and strong growth in demand for communications
and computer services and equipment.
q There will be a core of smaller, but leaner, industries which are likely to grow
modestly, bolstered by increasing specialisation and a shift towards export markets.
q Overall engineering output (GDP) is forecast to grow at 2.8 per cent per annum to
2004 and then higher, at 3.5 per cent to 2009. This will be underpinned by high
growth in technology and research and development industries.
q These trends to 2009 compare with a slightly lower growth for the whole of
manufacturing, and also a lower average growth figure for engineering in the
previous decade (1.7 per cent per annum, 1991-98).
1.17 According to the EEF (1997), the rate of technological, industrial and economic
change is expected to quicken in the next decade, and individual businesses will need
to become more competitive and more specialised. There will be growth in IT systems
in all aspects of business, greater flexibility in working practices and less traditional
demarcation, more ‘just in time’ and cellular manufacturing, and more global
businesses and a greater prevalence of international supply chains.
1.18 Several sources point to continued diversity across engineering, especially by sector: 5
q ‘Metals manufacturing, moulding and fabrication’ is identified as likely to be one of

the weakest engineering performers over the next decade. Like other labour
intensive industries it is becoming increasingly price sensitive (Wilson, 2000).
q The foundry sector, and especially high-volume foundries have been affected in
particular by the international market, and some are likely to disappear altogether
or move into more specialised areas (EMTA/ADAPT, 2000).
q Electronics and telecommunications are expected to benefit from projected strong

growth, especially if it moves more into higher value, ‘knowledge-based’ areas
where it can retain competitive advantage (ITCE SSG, 1999).
q The UK automotive components industry is likely to face a slowdown in orders as a

consequence of the exchange rate and difficulties in making efficiency
improvements (EMTA/ADAPT LM Observatory sector reports, 2000). The latter is
also likely to impact on the assembly part of the industry too.
q Vehicle assemblers are likely to take increasing advantage of international sourcing

to remain cost-competitive, and thus re-think their relationship with local suppliers.
This is expected to have a serious knock-on effect across UK manufacturing. There
is also a threat from over-capacity in the European car manufacturing industry.
q The aerospace sector is also looking to make changes to supply chains in order to
remain cost-competitive. It will increasingly look to outsource production work (eg
machining) at a global level to countries where labour is cheaper (SBAC, 2000).
q There is considerable uncertainty about major building projects going ahead (eg
new power stations) which affects the future outlook for the engineering
construction industry (ECITB, 1999). Growth will be affected by political factors
relating to investment in public transport, and energy policy.
Principal drivers of change

1.19 The main factors influencing change have already been referred to above, and will be
discussed further in the remainder of the report in relation to particular skills and
occupations. The main ones are competitive pressures and profitability (often blamed
on the high value of sterling) and the overall drive for quality, efficiency and meeting
greater customer expectations - to keep up with or ahead of the competition. Other
drivers, often linked to these, include (and some of these are effects as well):
q New working practices (for example, cell and team working, clean working areas) -
themselves influenced by a drive to increase efficiency; new ideas in managerial
thinking; the requirements of new technologies and products.
q The growth of outsourcing and devolution of responsibilities down the supply chain -
for example, in the automotive sector more work is being pushed down the supply
chain leading to new skill requirements for supplier companies; and also in the
engineering contracting sector (see section above).
6 q Technological change - leading to a shift towards higher-level occupations and

greater demand for higher-level skills. Specific changes include, for example: the
automation of production lines; the increased use of robotics and automated
processes; development of telecommunications; the increasing use of IT in stock
control systems, tele-sales and internet-sales; and the increasing amount of
electronics components in equipment (eg railway signalling, digital broadcasting).
q An increasing emphasis on customer service, and customers being more

demanding (eg requiring speedier response).
q Globalisation - which has affected decisions by multi-national companies about the

location of key functions of businesses, and hence key skills (eg concentrating
research and development in one country) also led to a growth of inward
investment in the UK from foreign companies on greenfield sites which has created
a focus of skilled people in certain locations. The continuing trend towards global
mergers places major economic decisions relating to investment in the hands of a
smaller number of companies.
q Flatter organisational structures, as a consequence of drives to control costs and

increase efficiency, which lead to shorter career ladders and increased demand for
management skills down the occupational hierarchy.
q Greater environmental concerns and increased safety awareness which puts

attention on quality and standards, especially after major incidents involving loss of
life (eg Piper Alpha for oil rig operations; Paddington rail crash for signalling).
q Social pressures, for example an increasing resistance to working in jobs that

necessitate long periods away from home (affecting engineering construction sites
in particular); and the need to develop better family-friendly employment policies.
Importance of diversity
1.20 Clearly, there is a diverse picture across the engineering sector with some sectors,
noticeably electronics, doing much better than others. It is important also to note the
diversity in terms of products and processes, and by size of establishment and
business outlook. (This is often why business surveys with slightly different coverages
show different results). Over two-thirds of engineering manufacturing establishments
have under 25 employees, yet 25 per cent of total employment is in large engineering
establishments employing 500 people or more (EMTA, 1999).
1.21 The engineering sector contains many of the most dynamic, leading edge companies
in the UK today, as well as a large number of relatively low-tech, ‘metal-bashing’
companies. They operate in both domestic and international markets (which are
subject to different pressures), and while many engineering businesses are
independent, and some still family owned, an increasing number are part of large
multi-national operations or international partnership arrangements. Inward
investment by foreign companies (eg Japanese, Korean, American) has been a feature
of the 1990s, especially in micro-electronics, consumer electronics and the
automotive industry.
1.22 Thus, while there are common themes across the sector relating to business factors
that affect employment and skill trends, there can be danger in over-generalisations
about engineering, as individual companies can be faced with very different issues and
concerns according to size, sector, region and markets. (The differences between the 7
engineering construction and manufacturing, and between electronics and the rest of
engineering have already been highlighted above). Where possible in this report, key
differences between sectors of engineering have been identified, and especially
between electronics and the rest of engineering, as they are thought to be subject to
quite different conditions.
Demand for Engineering Skills

2.1 In this chapter we review the evidence and discuss issues relating to the demand side
- the main employment patterns and trends in the sector, in particular the changes
relating to requirements for skills and the underlying causes. The information on
employment and demand trends is drawn mainly from the Projections of Occupations
and Qualifications (Wilson, 2000), the EMTA Labour Market and Skills Surveys of
1998 and 1999, the Employers’ Skills Survey (ESS) 1999, ECITB’s labour market
studies and the EEF’s Business Trends Surveys. Information on skill trends is drawn
from various, mainly qualitative, studies.
Current employment
2.2 As mentioned in Chapter 1, different definitions are used by organisations in the
collection of engineering occupation employment statistics which are not comparable
and thus cause difficulties in reaching an accurate estimate of total engineering
employment. An occupational mapping study of the engineering sector (OSCEng,
1998) estimated a population of around two and a half million people employed within
occupations that have some engineering component, of which just over 40 per cent
work within the main engineering industries. Analysis of the Labour Force Survey
(1999), shows 1.3 million employed in core engineering occupations (see Figure 1.1
and Table A3.1), 58 per cent of them in engineering manufacturing. Looked at
8 another way, 1.75 million are employed in engineering manufacturing (but not all in
engineering occupations, as this includes administration and sales staff) as defined by
the EMTA scope, and a further 40,000 in the engineering construction industry (ECITB
scope).
2.3 The Annual Employment Survey (AES) provides a breakdown of employment in the
engineering manufacturing sector, though detailed sectoral information is not available
every year. In 1996 there were 76,000 establishments. The key features of this
employment by size and sector are:
q The vast majority of establishments are small (two out of three had less than 24
employees, and only one per cent had 500+ employees (Table A3.2).
q However, 25 per cent of all engineering employees are in establishments with

500+ employees.
q Metal products and mechanical equipment sectors are the two largest engineering
manufacturing sectors (together accounting for 47 per cent of employment).
q Aerospace and motor vehicles (both sectors where economies of scale are
important), have more larger sites than other sectors; metal products is more
focused on very small establishments.
2.4 In terms of geographical distribution, the West Midlands is the most significant
employment region for engineering manufacturing. It accounts for over 20 per cent of
the total employment in England. The lowest share is found in London, and the North
East (both only four per cent of the total).
2.5 The composition of the engineering industry differs within each region, though all
regions have some representation of all of the engineering sub-sectors (see Table
A3.3). Notable regional features are:
q Mechanical equipment, metal products and motor vehicles sectors are heavily
represented in the West Midlands.
q Aerospace is focused more on the South East, South West, North West and Eastern
regions.
q The South East and Eastern regions both comprise a higher proportion of
electronics establishments than elsewhere.
q London and the South East account for over half of the head office employment in
the engineering construction sector.
q London is the location of a high proportion of engineering and other technical

consultancies and head offices.
2.6 As size of establishment varies by sector, so the sectoral composition in each region
explains some of the size differences. For example, the South West has a higher
proportion of employment in establishments with over 250 employees because of
its focus on aerospace; while in Yorks and Humberside there are higher proportions
of small firms because of the greater concentration there of mechanical and metal
products establishments. It is important that regional bodies are aware of the 9
size/sector breakdown for engineering in their region and also the differences between
the regional pattern and the national picture so that key issues of strategic importance
for engineering in each region can be addressed.
2.7 A breakdown of employees in engineering manufacturing by age (EMTA, 1998) shows

that 15 per cent are aged between 16 and 24 years, and 35 per cent are aged 45
years or over. When compared with the British workforce, the engineering
manufacturing sector has a slightly older age profile. However, it is noticeably younger
in electronics, electrical engineering and motor vehicles than in other engineering
sectors. The engineering construction industry has an older age profile with an
estimated 48 per cent aged 45 years or more, and even higher percentages among
certain occupations such as pipefitters and erectors/riggers (ECITB, 1999).
Employment trends
Past trends
2.8 As highlighted in the previous chapter, most sectors of engineering manufacturing have
been experiencing reductions in employment levels for most of the last few decades.
The downward trend did slow during the 1990s and there has been some recovery
over the last few years. The largest falls in the 1980s were in the metals and
mechanical engineering sectors, reflecting their poorer business performance. All
regions lost engineering jobs but the largest reductions were in London (Wilson,
2000).
2.9 Another trend has been a reduction in the average size of engineering employers, a
consequence of the earlier large-scale closures of factories, downsizing and
outsourcing. This has changed the shape of the sector, such that a higher proportion
of employees now works in establishments with under 250 employees (EMTA, 1999).
2.10 Since 1994, a recovery has been in place in engineering manufacturing and
employment overall rose five per cent between 1995 and 1998. Most regions have
seen growth in engineering manufacturing during this recent period, the exception
being London (Wilson, 2000). Growth has been strongest in electronics, machine
tools and motor vehicles, where inward investment by foreign companies has played a
major role, and in the case of electronics in particular, where global markets have
been growing at a fast rate. There has been growth also in the engineering
construction industry, but this has been almost entirely due to a shift in employment
from client to contractor organisations as large companies in other sectors downsized.
2.11 Looking more widely at the demand for engineering skills across the economy, sectors
outside of engineering, especially the IT and business services sectors, have shown
more buoyant demand trends over the long term than the engineering sector. There
are now more opportunities for engineers, especially those at professional level, to
work outside of the engineering manufacturing sector due to the growth and spread of
technology across the economy (see Chapter 1). In the last three years (1995-98),
the overall growth in employment in engineering occupations (all sectors) has been
surprisingly similar to that in the engineering sector (up by 3.9 per cent overall,
according to the LFS, 1995-98). However, there are considerable variations between
sectors, with, for example, the IT sector having a higher growth of demand for
10
engineers, especially software engineers, and parts of other manufacturing having
much slower demand growth rates.
Current trends
2.12 Currently, the main picture is one of relative stability in the engineering sector overall,
though there are signs of a return to the overall declining long-term trend. Various
surveys of engineering employers show little change overall in employment levels over
the last year:
q In the ESS survey in mid-1999, 44 per cent of employers in the engineering

manufacturing sector reported that their total employment had not changed in the
last 12 months, and slightly more reported an increase (31 per cent) than a
decrease (25 per cent). Any change that was recorded tended to be ‘a little’ rather
than ‘a great deal’.
q The EMTA survey undertaken earlier in 1999 also showed little change, but here
the trend was more downwards rather than upwards; however, there are slight
differences between the scope of the two surveys which may explain this variation.
q In the 12 months to September 1999, the EEF reported a decline in engineering

employment of 4.4 per cent (This estimate is based on the Labour Force Survey).
Nearly three-quarters of that reduction took place in the six months to March
1999.
q There is surprisingly little difference apparent between engineering sectors: all

sectors of engineering reported a decline in the 12 months to September 1999,
though aerospace recorded a slight increase in the third quarter and electronics
recorded least reduction in employment levels over the period (EEF, 1999). In the
EMTA survey, employers in aerospace were more likely than those in engineering as
a whole to report an increase over the last 12 months, but electronics showed a
similar pattern to the rest of engineering. Thus, although the electronics sector is
showing much stronger business growth than engineering as a whole, it is not
reflected to the same extent in recent employment trends.
Employment forecasts
2.13 According to the IER’s national projections, the future trend is expected to be
downwards in terms of overall employment levels in the engineering sector (Figure
2.1). Between 1998 and 2009 there is a forecast net fall of 315,000 jobs in the
engineering manufacturing sector, a drop of 17 per cent (Wilson, 2000). The bulk
of this reduction will take place during the 1998-2004 period (13 per cent down).
The decline in engineering employment contrasts with a growth of 8 per cent in
employment in the economy as a whole, resulting in a further shift away from
employment opportunities in engineering and towards other sectors.
Figure 2.1: Employment in engineering, 1971-2010 (millions)

3.5
3
11
2.5
Millions
1.5
0.5
0
1971 1975 1981 1985 1991 1995 1998 2001 2005 2008 2010
Years
Source: Wilson, 2000
2.14 Engineering sectors bearing the brunt of this forecast reduction are likely to be in
traditional areas of mechanical engineering and basic metals (Wilson, 2000;
EMTA/ADAPT, 2000). The EEF also report an expected fall in employment overall, by
about two per cent per annum across the industry. However, electrical equipment and
electronics sectors are both forecast to rise. The ECITB forecasts indicate a decline in
manpower required to 2001 in the engineering construction industry.
2.15 Most regions are forecast to decline to 2004, though some only marginally (ie South
West, Wales, Northern Ireland) and Merseyside is forecast to increase (though from a
small base, some 30,000). The biggest percentage reduction in engineering
employment, will be in London (22 per cent) (Tables A3.4 and A3.5).
2.16 The employment reductions will be due mainly to technology change bringing about
improvements in productivity, through, for example, more flexible use of labour,
changes in working practices and work organisation, but changes in markets and
the effects of price competition will also be factors especially in certain sectors
(Wilson, 2000).
2.17 Looking at the broader picture, a smaller reduction in the main engineering
occupations across the economy is forecast, down in aggregate by five per cent
between 1998 and 2009. On the basis of current and past trends there is likely to
be considerable variation between sectors outside of engineering. The current growth
sectors of IT, business services and telecommunications are likely to continue to see
growth in demand for engineers. However, detailed occupational projections at a
sector level to show this more fully are not available.
Importance of replacement demand

2.18 However, this forecast reduction in employment levels does not mean that there will
be fewer job opportunities in engineering in the future. Employers will need to replace
workers who leave as a result of retirement and career changes. Estimates of future
employment levels provide a useful indication of change, but they can give a
misleading impression of future demand in terms of job opportunities and related
training needs.
12
Figure 2.2: Replacement demand and net requirements for selected occupations in
engineering sector, 1998-2009 (per cent)
Corporate Managers
Managers and Proprietors
Science/Tech Professionals
Teaching/Research Prof.
Business/Public Service Prof.
Science Associate Prof.
Bus/Public Serv. Assoc. Prof.
Admin. & Clerical Occupations
Secretarial & Related Occs.
Skilled Metal/Elec. Trades
Skilled Construct. Trades
Other Skilled Trades
Sales Occupations
13
Process Plant & Mach. Ops.
Transport Drivers and Ops.
Elementary: Trades/Plant/Mach
Elementary: Clerical/Service
0 10 20 30 40 50 60 70
Replacement Demand Net Requirement
Source: Wilson, 2000
2.19 In the case of engineering, the total replacement demand forecast outweighs the
negative expansion demand in every occupational group, thus leading to a positive net
requirement overall. It is estimated that around 370,000 new job openings will arise
over the next decade in the engineering manufacturing sector. In occupational groups
where significant losses are forecast (due to negative expansion demand), in particular
skilled metal electrical trades, these are projected to be more than compensated for
by replacement demand, mainly due to retirement. Some of the largest numerical net
requirements in the engineering sector are for corporate managers (71,000), science
and technical professionals (34,000), business associate professionals (32,000),
skilled metal and electrical trades (109,000), process plant and machine operatives
(58,000), transport drivers and operatives (34,000) and elementary clerical and
service groups (52,000) (Figure 2.2).
Employment pattern
2.20 Unlike other sectors (eg in the services industries) little overall change is expected in the
pattern of engineering employment in terms of employment status. It is expected to:
q remain predominantly male (over 70 per cent)

q employ mostly full-time workers (94 per cent)
q have relatively few self-employed people (only 7 per cent).
However, there will be changes in the occupational structure, and also further shifts in
the size structure towards smaller firms.
Changing occupational balance

2.21 It is clear from various surveys that demand in some engineering occupations has
been growing faster than others. This is generally backed up by the available
statistical evidence (in the LFS) though the pattern is not entirely consistent. Looking
across the economy, the employment of engineering professionals, as a group,
increased by 13 per cent between 1992 and 1998, but grew at a faster rate, by 18
per cent, between 1995 and 1998. Much of this growth, however, is due to the
massive growth in software engineers, up by almost 200 per cent between 1992 and
1998. If they are excluded from the total there was actually a net fall of 8 per cent in
14 the employment of engineering professionals in the 1992-98 period, though this
changed to a small (0.5 per cent) increase between 1995 and 1998. Lower-level
occupations have recorded reductions between 1995 and 1998 though these varied
between occupations (Table 2.1).
2.22 The occupational balance in engineering is expected to continue to shift towards

higher-level occupations (in terms of skills and education levels), and reflects in part a
more general pattern across the economy. Looking across the economy, the largest
reductions in employment levels are expected to be in skilled metal and electrical
trades. This is in contrast to engineering professionals who are expected to increase
over the next decade (Table 2.2). But as shown above, even for declining occupations
such as skilled metal and electrical trades (which include engineering craftsmen and
women) losses are likely to be more than compensated for by replacement demand,
leading to a significant number of new job openings in the years ahead.
Table 2.1 Occupational change , 1992-1998 (all sectors, SOC92)
Occupational group Employment % change

1992 1995 1998 1992-98 1995-98
All professional level
engineers (21) 544,800 518,700 617,000 +13.2 +18.9
Software engineers (214) 59,000 76,000 171,800 +190.9 +126.0

Other professional level
485,800 442,700 445,200 -8.4 +0.6
engineers (21 minus 214)
Engineering technicians/
electrical/electronic 62,400 86,700 84,200 +34.9 -2.9
technicians (301, 302)
Skilled engineering
operatives (51) 529,200 501,400 467,400 -11.7 -6.8
Electrical/electronic
production fitters, 26,500 26,800 24,800 -6.3 -7.6
electrical engineers (520,522)
Machine operatives
344,000 368,900 367,100 +6.7 -0.5
and assemblers (84,85)
Source: LFS, 1992-98
15
Reasons for occupational shift

2.24 The reasons for this shift towards higher-level engineering occupations mainly relate to
the twin demands of technology and changing business needs (eg shorter production
cycles, speedier response to customer needs, discussed earlier in Section 1.19).
Another important factor is the differences between sectors in their occupational patterns
(see Table 2.3).
Table 2.2: Occupational projections for selected SOC 2000 occupations (3 digit)
relevant to engineering
Occupation 1998 2009 Change % change

level level 1998-2009 p.a
in thousands (000s)
212 Engineering professionals 449 564 115 2.1
311 Science and engineering technicians 207 198 -9 -0.4
521 Metal forming, welding and related trades 215 169 -46 -2.2
522 Metal machining, fitting and instrument making 463 363 -101 -2.2
813 Assemblers and routine operatives 597 594 -3 0.0
812 Plant and machine operatives 334 271 -63 -1.7
Source: IER estimated based on LFS data, F92F9 Forecast
Table 2.3: Occupational profile of engineering sectors (selected occupations only,

percentage of the total employed)
Occupation Electronics Aerospace Motor Mechanical Other Metal Basic

vehicles equipment transport Products Metal
Professional engineers 10 9 3 5 3 4 2
Technician engineers/
9 11 3 7 12 5 4
engineering technicians
Craftsmen/women 9 23 17 21 41 25 23
Operators and
34 32 46 30 12 31 40
assemblers
Source: EMTA Survey, 1999
2.25 Historically, craft and lower skilled occupations have been concentrated in the more
traditional end of engineering, in mechanical engineering and metal products. These
are sectors which have reduced in size at a faster pace than sectors where higher-level
occupations are more in demand, such as electronics and aerospace (as illustrated in
Table 2.3). The latter are also identified as more likely to be growth sectors for the
future, as is the business services sector which includes the engineering and technical
16
consultancies and which is expected to continue its strong recent growth trend.
2.26 The reorganisation of work has also affected the occupational pattern, especially the
trend towards outsourcing and subcontracting (see Section 1.5). For example, as
mentioned earlier, large companies in the oil and gas industries have traditionally
contracted out engineering construction work but are increasingly putting out more
areas of work to suppliers. This affects the mix of occupations in smaller engineering
contractors which has been changing over time. As contractors take on more repair
and maintenance work (it now accounts for three-quarters of the business on site of
engineering construction companies, ECITB, 1999) and some process operations too,
they have seen an increase in employment in particular occupations, such as
production process operatives. Another example is in the automotive sector where
Original Equipment Manufacturers (OEMs) are subcontracting more design work to
suppliers and also the production of sub-assemblies and components which they
previously manufactured themselves. The first tier suppliers who previously
manufactured components are only now involved in work requiring a wider range of
skills, including higher-level skills (eg technician engineers) (see EMTA/ADAPT, 2000;
Shackleton et al., 2000).
Skill trends
2.27 There have been considerable changes in the skills needed in engineering
occupations. In particular, there is an overall trend towards jobs becoming more
demanding and toward skill intensification. However, it is important also to recognise
areas of continuity. Although there has been a general decline in the demand for craft
employees, craft skills are still very important in a number of engineering sub-sectors.
Furthermore, many of the skills traditionally needed in these occupations are still very
important. For example, toolmakers and welders still need many of the skills they
have always needed to operate effectively. In several studies, employers reported how
recruits often did not have sufficient underpinning knowledge (Dench, 1999; PRIME,
1998), largely because this had been reduced in training courses. For example, they
did not understand how different materials react in different conditions.
This knowledge remains very important; indeed, it is often an essential basis from
which people are able to learn new skills and take on new ways of working.
2.28 A number of key themes emerge from studies exploring changing skill needs in
engineering occupations. General trends in skill needs are outlined in the rest of this
section, although it should be stressed that the diversity in the sector can also be
seen in the way changes in skill needs vary across the sector. In the following section,
more occupationally specific changes are discussed.
New and specific technical skills

2.29 Technical change is often evolutionary. However, there is a continual need for
employees to keep up with a range of technical changes. This affects employees at
all levels, although the complexity of change increases with the occupational hierarchy.
At some levels, the need is for skills in new process technologies. Professional
engineers, especially those involved in ‘leading edge’ and specialist activities have to
keep up with innovations and developments in design, materials and other factors
which influence the nature of a product.
2.30 The 1998 EMTA survey explored the extent of use of different technologies. CNC and 17
CAD were most commonly used, by 46 per cent and 43 per cent of establishments
respectively. EMTA’s and other studies have shown a need for a greater requirement
of skills in these areas.
2.31 Studies of the automotive industry (for example, PRIME, 1998) provide examples of
the need for employees, especially those at craft and technician level, to increase the
depth of their knowledge in new and developing technologies, for example robotics,
and conveyor, welding and manufacturing control systems.
Computer literacy and IT skills

2.32 There is a close association between technical change and the need for greater IT
skills. An increasing level of computer literacy is required of most engineering
occupations, although again the complexity varies. At production levels it is basic
keyboard skills and the ability to operate computerised processing technology which is
important. At more senior and professional levels, computerised technology is involved
in the product itself and the design process. A recent study (Shackleton et al., 2000)
reported an increasing use of electronic data transfer.
2.33 In telecommunications and electronics, there has been a particular move away from
traditional mechanical and electrical skills towards an emphasis on IT skills. This is
linked to both changes in the nature of the products and in the processes of
production.
2.34 In engineering construction, the impact of advanced IT and communications

technologies (ITC) is having a wide impact on administration and e-commerce and also
in electronics (eg in diagnostic tools). This affects all skill levels. It is becoming
increasingly realistic for engineers in the engineering construction industry, for

example, to work from home on a project based anywhere in the world, and the
concept of virtual teams is becoming a reality (ECITB, 2000).
Multi-skilling and greater flexibility

2.35 There is mixed evidence on the extent to which true multi-skilling is occurring, although
the 1998 EMTA survey found that 85 per cent of employers had introduced some
multi-skilling. In more traditional activities, multi-skilling is less common. However,
there is widespread evidence that demarcations between jobs are increasingly
unacceptable and that, at a minimum, task flexibility is required.
2.36 A study of the automotive industry (PRIME, 1998), concluded that skilled electro-
mechanical craftsmen/women needed to be multi-skilled; there was less demand for
specialised trades and a greater emphasis on electronic skills. Production employees
were also becoming more multi-skilled, needing more mechanical, electronic and data
processing skills. Whether multi-skilled or not, people working in a range of engineering
occupations are expected to be increasingly flexible. The nature of this varies from
being able to work at the margins of a different specialism, to being prepared to pick up
a range of different tasks, however mundane. For example, Shackleton et al. (2000)
reports how shop floor workers are increasingly expected to multi task. This usually
means being able to operate more than one machine at once. More flexible workers
are also needed in the engineering construction industry, partly to help control costs but
also as a consequence of investment in new technology. For example, many oil
18
platforms are now manned by smaller teams of more flexibly skilled workers.
The ability to deal with change

2.37 Change, whether through the adoption of new technologies and working practices,
take overs and mergers, and new organisational structures is a fact of life for most
engineering employers. Employees at all levels need to be able to cope positively with
this, whether through their general attitudes or ability to learn new skills. Managers,
especially senior managers, need ‘change management skills’, enabling them to
introduce and effectively manage change through their organisations. A study for the
Society of British Aerospace Companies (SBAC, 2000) identifies developing change
management skills as a key challenge for the future.
An ability to continue learning, re-skilling

2.38 Implicit in the areas listed above is the need for engineering employees to continue
learning. Employers increasingly look for an ability to learn, but also an attitude of
mind which predisposes people to be interested in and proactive about learning.
There is an increased demand for advanced training to be taken in a modular way, to
meet the needs of graduates to continue to update their skills regularly (and to do so
more as the pace of technological change quickens).
The greater importance of personal and generic skills

2.39 Various studies report the increasing importance of these skills. In undergraduate and
graduate studies, they are often described as ‘broadening skills’ and are in increasing
demand by employers (and by students). They are very wide-ranging in nature, and
reflect changes in work organisation and working practices (in particular moves
towards cell working and emphasis on teamwork), technological change and the
greater expectations placed on most employees. Overall, employees are expected to

have the following skills and abilities:
q communication
q teamworking and getting on with others, including being able to work in self-
managed teams
q problem-solving and diagnosis, and at professional levels, greater abilities for

forward thinking and ‘whole system’ thinking
q taking responsibility, showing initiative and becoming more involved

q organisation and management.
Understanding the business
2.40 This has varying implications at different levels. For example, those involved in design
and innovation need to understand the business and its position and aims in the wider
market. However, as businesses have become tighter, leaner and placed a greater
emphasis on reducing costs and increasing efficiency. it has become increasingly
important that employees at all levels understand the implications of their actions, or
that of their team, for others and the customers.
Customer service awareness

2.41 Engineering sectors have become much more customer-focused, and this has 19
implications for the skills of employees. Many of these have been discussed above.
For example, much greater emphasis is placed on communication skills, attention is
required to delivery dates and, where a bespoke product is being made, to the
requirements, interests and needs of the customer. Organisations making bespoke
products or involved in supply chain activities are now under much greater scrutiny
from their customers visits and audits might occur with little or no notice. All
employees need to be informed and able to react appropriately to these changes.
Legislation and the environment

2.42 This is an emerging area of increasing importance for many industries. For example, it
is likely to affect both design and production of cars in the future, through legislation
which affects the industry directly, and also indirectly, through for example fuel
emissions. Employees in a range of occupations will be expected to have the
knowledge and skills to ensure that these issues are fully addressed.
Specific occupational skill changes

2.43 There have also been a number of more specific changes affecting different
occupations, and these are discussed below.
Managers
2.44 With an emphasis on efficiency and competition, the key role of managers is
increasingly being recognised and attention is being paid to the more generic skills
that make a good manager. While technical skills and knowledge are part of this, they
are not enough on their own. Managers need, for example, to be able to manage
budgets, people, teams, clients and customers operate strategically as well as on a
day-to-day level and show leadership. Promotion to management has traditionally
been seen as the main form of recognition and reward. Some organisations are
struggling with how to motivate those people who are technically excellent but lack, or
are uninterested in developing, people and managerial skills while some companies, for
example, have been experimenting with different promotion routes and sideways moves.
First-line managers/team leaders

2.45 The role of the team leader has become increasingly critical, and is qualitatively
different from that of a traditional supervisor. Team leaders have much greater
responsibility for managing their team, including project management, budgets, down
time, and people management. The non-technical aspects of the job are much more
important than in the past: for example, communication skills, the ability to motivate
and deal with any staffing problems, including disciplinary issues. First-line managers
also have significant responsibilities in training their team, and this requires skills
beyond simply having the technical knowledge and expertise to do a job.
Professionals and technicians

2.46 Broader skills are needed at higher levels, technological excellence is no longer
enough. For example, professional engineers in manufacturing need to be able to
communicate with colleagues (junior, at same level and senior to them), and also with
clients, in technical and in non-technical language. They also more often nowadays
work in teams, work with production staff to address problems, and need an
understanding of all or most of the production process, as well as the product.
20 2.47 In some sectors, there can be tensions between a requirement for specialists and
generalists. For example, specialists might be needed to work with specific products
and technologies, to diagnose and address deep-seated production and design
problems. The automotive study (PRIME, 1998) identified a tension between
specialist needs and the need for design generalists who are able to adapt to different
sub-systems, emerging technologies and changes in the design stage. Other
employers want professional and technical employees with general expertise so that
they can work flexibly across the company. In electronics and telecommunications,
graduates are expected to have analytical and conceptual abilities, to understand
systems and how to integrate them (Mason, 1999b).
2.48 Employer concerns about some graduates’ lack of ‘work-readiness’ and ‘business
understanding’ (Mason, 1999a) may reflect the greater emphasis that employers are
giving, because of commercial pressures, to seeking graduates who can ‘hit the
ground running’.
Production workers
2.49 The evidence on production workers is mixed. Some suggests that they are
increasingly being deskilled, but other evidence suggests that they are being affected
both by multi-skilling, teamworking and new technologies demanding higher-level skills.
These different views again reflect the diversity within the engineering sector.
In some sub-sectors and companies, production tasks have been largely automated
and deskilled. However, in others (for example, automotives and aerospace),
production operatives are as affected by the demands of technological and
organisational changes as are other occupational groups.
Supply of Engineering Skills

3.1 In this chapter we review the evidence on engineering supply side issues. The main
focus is the output from the education system and qualification trends. Training
activity, including in-company training and new Modern Apprenticeship programmes
are also included.
3.2 In engineering, although the link between qualification and occupation is not as strong
as in other areas, such as health or legal work, vocationally based training and
qualifications have long been a feature. Certain qualifications are traditionally
associated with particular occupations, especially at technician and professional levels,
and can make a valuable contribution to meeting skill needs. The Engineering
Council’s regulations (SARTOR) for the formation of engineers specify particular
education qualifications (discussed further in section 3.10). In general, however, and
particularly at lower occupational levels, engineering employers do not value
qualifications per se, but look for competent and experienced workers who may, or
may not, have formal qualifications. On the whole, many have a traditional outlook
towards qualifications and there is still a range of views across engineering about the
value of the (not-so-new) S/NVQ framework, both positive and negative ones.
Stocks of qualified people

Past trends 21
3.3 The main trend is that the number of employees in engineering holding vocational
qualifications is increasing (Mason, 1999a). This is in line with general trends in the
employed workforce (Wilson, 2000). Though it is difficult to measure trends precisely
over time because of changes to qualifications and occupational classifications, the
statistics in Table 3.1 (Taken from Mason, 1999a) give a good indication of the
improvements over the last ten years. The biggest change is in the percentage of the
engineering workforce with no vocational qualification or general qualifications higher
than GCSE Grade D or equivalent which has halved, from 35 to 18 per cent, in ten
years. Those who hold vocational qualifications at higher or lower intermediate levels
and degree or above have risen from 43 per cent to 53 per cent. Within this, degree
level qualifications rose from 8 to 11 per cent.
3.4 This change mainly reflects the supply side of the labour market as there has been a
rising level of educational attainment in the population and, in particular, increasing
numbers staying on in post-compulsory education. But, it also reflects the shift in the
sector towards higher-level occupations (discussed in Chapter 2).
3.5 Compared with the workforce as a whole, the percentage of graduates (1998) in the
engineering sector is lower (11 per cent) than for all industries (16 per cent), but the
percentage with higher or lower intermediate vocational qualifications is much higher
(42 per cent) than for all industries (30 per cent). The percentages with no vocational
qualifications or general qualifications higher than GCSE Grade D or equivalent are very
similar (Mason, 1999a). However, again these overall figures for engineering mask
differences between engineering sectors. In electronics, for example, the workforce is
more polarised at the higher and lower levels: a much higher percentage of the
Table 3.1: Highest qualification held by workforce in metal goods, engineering and
vehicles industries (1998:SIC80 Div 3; 1998: SIC92 Groups 28-35) percentages
1988 1998
Degree and equiv. or above 8 11
Intermediate* 35 42
Basic vocational** 7 9
‘A’ level or equivalent 4 4
‘0’ level or equivalent 12 15
No voc qualification, or GCSE higher than grade D 35 18
* Includes BTEC/SCOTVEC Higher National and BTEC National awards, C&G advanced craft and craft awards,
completed trade apprenticeships and equiv (1998 data includes NVQ Level 3 and 4 and GNVQ Advanced awards)
** Includes GNVQ Intermediate and Foundation awards, NVQ Level 1 and 2 (1998 data), BTEC general and first
awards, SCOTVEC National Certificate modules, C&G below craft level, YT, YTP certificates
Source: from Table 10, Mason, 1999a (based on Labour Force Surveys)
electronics industry’s workforce are degree-qualified (22 per cent) but slightly less (14
per cent) have no vocational qualifications or GCSEs above Grade D, compared to
22 engineering as a whole (Mason, 1999b).
3.6 There is difficulty in making international comparisons of educational levels because of

differences between countries in their educational and vocational systems.
Historically, the UK engineering industry appears to have employed fewer people with
intermediate qualifications than many other European countries especially Germany,
but at degree level there is more similarity (see Mason, 1995; Prais, 1989). Across
the whole economy, approximately 380,000 people hold degree qualifications in
engineering disciplines (either single or combined with other subjects, LFS, 1999), a
figure that has not changed much over the last two years. (This includes all branches
of engineering but not science and technology subjects like materials).
Future trends
3.7 Looking to the future, at the higher qualification levels, the available national
projections data (Wilson, 2000) show that the graduate penetration rate overall will
increase from 15 per cent for all occupations in 1998 to 20 per cent by 2009. For
the two SOC groups of most relevance to engineering:
q science/engineering professionals: an increase in graduate penetration from 51 to

57 per cent
q science associate professionals: an increase from 20 to 27 per cent.

3.8 This upward trend is related to ‘supply’ effects (ie more graduates being available and
finding jobs more easily than non-graduates) but is more likely to be due to the impact
of increased demand in the industry for higher educational levels (Wilson, 2000).
Participation in formal education

3.9 There are two main educational outputs in relation to qualifications of relevance to this
report - from further education and from higher education. The main trends and
issues related to each are discussed in separate sections below, but first we highlight
some important issues for both, relating to falling interest in engineering careers.
Falling share of student population

3.10 In both sectors, there have been increasing numbers taking engineering courses over
the last ten years, but they represent a falling share of the total student population.
Several reasons are put forward for this:
q Poor image of the industry: This has dogged engineering for decades and
appears to be as much an issue today as it was in the 1970s. A number of
research studies have highlighted the industry’s unattractiveness to young people,
in particular its poor image as a career and also a lack of knowledge about
engineering jobs and engineering/technology matters in general. A 1998 survey of
Year 7-11 pupils showed that just one in seven would choose a career in
engineering, and these were mainly boys (EMTA, 1998a). A recent Engineering
Council survey of members showed that around one-quarter would not recommend
engineering as a career to a young man or woman, and among those that would
(60 per cent) ‘excitement’, ‘pay’ and ‘status’ were hardly mentioned as features
(Engineering Council, 1999).
23
Industry would like to see more initiatives to raise awareness and knowledge of
engineering careers through giving school students more direct experience of the
engineering industry, for example through work experience and industrial
placements. A recent study on introducing Engineering GNVQ to schools showed
positive benefits among those participating which included more able students not
usually given the opportunity to experience vocational courses (EEF, 2000).
q Choice of options: Another reason for the declining interest in engineering courses
relates to the limited numbers choosing mathematics and science subjects at
school. Though numbers have been growing, only half of 16 year olds get GCSE
maths Grade C. Only around ten per cent of the cohort go on to study maths at ‘A’
level (AEB). Maths ‘A’ level awards have remained broadly static, but physics has
declined by 13 per cent between 1993 and 1997, though the trend has since
levelled. There is a perception that science and maths ‘A’ levels are harder and less
interesting than others (Sharp et al., 1996). The majority of engineering courses at
universities, especially the top ones, require maths and physics ‘A’ level, and often a
third science ‘A’ level (Steedman et al., 2000). Then, for those with maths and
science qualifications, there are other alternative career options to consider.
Computing and IT subject areas are often seen as more attractive in terms of
graduate salaries and career prospects (ITCE SSG, 1999). Many do not require
maths ‘A’ level, in contrast to engineering.
q Changing pattern of study: The Government’s focus on encouraging more young

people to stay on at school and progress to higher education is thought to have
had a detrimental effect on the ‘vocational route’. There has been a shift in the
balance of post-16 education towards higher education study caused by increased
staying on rates at school and the rapid expansion of higher education in the early
1990s, along with changes in perceptions of the status of different qualifications.
Thus, people who previously may have taken vocational qualifications at FE college
(eg HNC, NVQ Level 2/3), on a part-time or full-time basis, are more likely
nowadays to stay on at school and aspire to a university place. Those who take
HNC/HND qualifications usually end up completing a degree. Employers often
comment about the disappearance of the ‘traditional FE student’. There is also a
noticeable lack of progression between the NVQ lower levels (commented on by
Engineering Council, 1998). Furthermore, the new GNVQ qualifications have
established themselves more as a route to HE entry. Compared to many other
countries, the UK has less output at sub-degree level. In the case of France, for
example, these increase engineering entrants by a factor of three (Steedman, et
al., 2000).
In its initial proposals in response to the final report of the Skills Task Force, the
Government intends to strengthen the vocational route and encourage greater
participation in vocational learning by developing career ladders of progression in
vocational study or apprenticeships through to foundation degrees. It is also
focusing expansion of higher education in general at sub-degree level (in response
to the Dearing Report on HE, 1997). The Engineering Council is also aiming to
address the perceived imbalance in the supply of engineers, which is weighted
towards the higher (Chartered) level, through its new regulations, SARTOR 97.
24 These have the broad support of the industry. The regulations are designed to
improve access to Chartered and Incorporated status from different starting points,
including FE qualifications.
q Low take-up by women: Only 11 per cent of engineering students in FE colleges

are female (Individual Student Record [ISR]) and 14 per cent of undergraduates in
higher education (UCAS, 1999); a situation which has changed little during the
1990s. The main reasons relate to the two above (image and alternative, more
attractive, options). Interestingly, women are much better represented at ‘A’ level in
physics and maths (23 per cent and 36 per cent respectively of the total awards
are to women) suggesting that the ‘put-off’ factors are working at both earlier and
later decision-making stages. Differences are also apparent between disciplines:
chemical engineering does much better than other engineering disciplines with 24
per cent of degree places taken by women.
Further education
3.11 The FE sector continues to be in a state of flux due to changes in funding systems,
qualifications and types of provision. These, together with re-classification of
engineering subjects in student statistics and movements of programmes between the
FE and HE sectors, make it difficult to gain a clear picture of long-term trends relating
to engineering. However, work by the FEFC to improve the available statistics, and a
recent report on the engineering programme area (FEFC, 2000) have made it possible
to identify the following trends and issues:
q In 1997-98 7.2 per cent of the 4.4 million FE students were on engineering
courses.
q The vast majority (80 per cent) study part-time.

Table 3.2: Full-time and part-time Engineering Students 1989-1999 (includes period
before incorporation, numbers rounded to nearest 100)
Year Full-time Part-time Total

1988-89 28,200 190,300 218,500
1992-93 43,300 158,900 202,200
1996-97 62,900 243,400 306,300
1997-98 57,000 253,500 310,500
1998-99 53,300 228,600 281,900
Source: FEFC, 2000
q While numbers on engineering courses grew in the first half of the 1990s, there
has been a decline of six per cent since 1995/96 (Table 3.2). This compares with
a growth in overall FE student numbers of 14 per cent.
q Full-time study has been declining overall in recent years (six per cent), but the rate
of decline in engineering has been much steeper (down by 20 per cent).
q Part-time students in engineering have also declined slightly but only from
1997/98, previously they were increasing (Table 3.2). 25
q A large number of engineering related courses are offered by colleges. Almost 900
engineering related qualifications are on the FEFC’s student database (the ISR -
Individual Student Record), and 86 per cent of FE colleges offer some engineering
provision. This ranges from foundation through to intermediate and advanced
courses and also HE programmes (mostly HNDs), and courses are of varying
durations. There are concerns about the viability (in terms of cost effectiveness
and maintaining standards) of this wide range of provision at so many colleges.
q There is variation between regions. Greater London, North West and South East
have the highest percentage of national full-time provision (15-16 per cent each),
East Midlands has the lowest percentage (7 per cent). West Midlands and North
West have the highest percentage of national part-time provision (15-16 per cent
each) while the lowest is in Greater London (8 per cent). To some extent these
differences reflect the pattern of engineering employment across the country and
the regional economic trends.
q North West and West Midlands have experienced the greatest decline in full-time
students, while other regions have been more volatile especially in regard to part-
time study.
q Growth in enrolments has been much stronger at Level 1 (83 per cent) than at
Level 3 (just 5 per cent) over the last four years (Table 3.3). GNVQ courses in
engineering represent a very small number of enrolments, only about one-sixth of
those on BTEC courses.
q Looking to the future, college strategic plans suggest a projected growth in

engineering students of five per cent over the next two years.
Table 3.3: Engineering enrolments by Notional NVQ Level, 1994-98
NVQ Level 1994-95 1995-96 1996-97 1997-98

1 48,195 62,035 76,782 88,361
2 85,944 94,674 114,570 124,239
3 66,759 67,377 69,012 70,241
H Higher
24,637 21,360 20,080 20,646
NVQ Level 4 or above
X Unassigned to level
40,985 72,343 59,547 72,792
usually because not known at entry
Total number of
266,520 317,789 339,991 376,279
engineering enrolments
Source: FEFC, 2000
3.12 By 1998/99, a total of 276,000 NVQ awards have been made in the engineering
framework area. This comprises 10 per cent of all NVQ awards (source: NISVQ). In
1998/99, 46,000 NVQ/SVQ awards in engineering were made compared with 38,000
in 1994/95, an increase of 20 per cent. Over half of these awards in 1998/99 were
26 at Level 2 (29,000) and most of the remainder at Level 3 (15,000).
3.13 In addition, 51,000 other vocational awards in engineering were made in 1998/99.
Approximately 13,000 of them were at Levels 4 and 5, 15,000 at Level 3 and the
remainder, 23,000, at Levels 1 and 2.
Higher education
3.14 As indicated above, there has been an enormous expansion in higher education over
the decade. Undergraduate entrants more than doubled between 1988 and 1998
and the participation rate for young people increased from 15 per cent of 18/19 year
olds in the 1980s to over 35 per cent today (UCAS, 1999; HESA, 1999). However,
engineering has not shared in this expansion to the same extent as other subjects.
After peaking in 1993, at just over 21,000 acceptances from UK applicants to full-
time engineering degree courses, the numbers started to decline, though the situation
has become more stable in recent years. The number of engineering undergraduates
in total has decreased by 10 per cent between 1994/95 and 1997/98 while the total
number of undergraduates (all subjects) has increased by 10 per cent, and numbers
on popular subjects such as computing have increased by almost 20 per cent (HESA,
1999). Graduate output in engineering and technology disciplines was 22,000 in
1995, an increase of 55 per cent since 1988. However, growth in output in all
subjects was slightly higher at 79 per cent.
Table 3.4: Annual output of first degree graduates by selected subject groups, UK
1995-98
Mechanical Electrical Electronic All Engineering All

engineering engineering engineering & technology subjects
1995 3,468 1,204 3,585 22,083 237,798
1996 3,673 1,281 3,824 23,318 251,248
1997 3,827 1,037 3,923 23,017 255,260
1998 3,913 1,014 3,853 22,574 258,753
Source: HESA Annual Reports on students in the HE institutions, 1996-99
3.15 Recent trends at a more disaggregated level, show that total graduate output in
engineering and technology increased slightly between 1995 and 1997, but fell back
in 1998 (Table 3.4). A seven per cent growth in electronics engineering graduates
was recorded between 1995 and 1996, but since then numbers have been almost
static.
3.16 The main reason for this decline is viewed as being the unattractiveness of engineering
as a subject to study and as a career (see Section 3.10 above). Steedman et al.
(2000) attribute it to the decline in well qualified candidates, notably at maths and 27
physics ‘A’ level (see above), though they acknowledge that there are other factors
causing engineering courses to struggle to attract candidates from the limited pool of
talent available. There is evidence from other studies also about the quality of
undergraduate entrants to engineering (see for example Mason, 1999a; Jagger and
Connor, 1998). Measured by ‘A’ level points, there is considerable variation in the
entry standards of university engineering courses and a wide range of ‘A’ level scores
are recorded overall:
q Twenty-six per cent of ‘A’ level entrants to engineering degrees in 1997 had 26+
points, above the average for all subjects (24 per cent). It was a similar figure in
biological and physical sciences but lower in mathematical sciences (44 per cent)
and humanities (31 per cent).
q But almost one-third of ‘A’ level engineering entrants had scores of 15 points or
fewer, which compares with around 20 per cent for law and other humanities
subjects (Mason, 1999a).
3.17 The Engineering Council’s new SARTOR 97 regulations are designed to address this
variation between departments: some are now being accredited for graduates seeking
the lower Incorporated Engineer membership, not Chartered Engineer. One of the
criticisms of the new SARTOR, however, is that it is based on input measures (‘A’ level
equivalent points) and that there is no measurement of output standards of graduates.
The latter is currently the subject of further consultation.
3.18 A number of studies of employers have highlighted criticisms about the quality of new
graduates, including engineering graduates, especially in terms of their lack of
personal transferable skills (AGR, 1999; Mason, 1999a). Employers report how many
engineering and technical graduates are deficient in communication and interpersonal
skills, and an apparent ‘mismatch’ in the extent to which graduates are ‘work-ready’
and understand how business operates. This partly reflects a greater expectation by
employers of new graduates’ work-relevant skills developed in their degree studies.
3.19 Unemployment of engineering graduates is slightly above the average, despite the
reported high demand from employers, especially from electronics employers. In
1998, unemployment of new engineering and technology graduates (HESA, 1999)
stood at 6.6 per cent, slightly higher than the average of 5.7 per cent. Electronics
engineering graduates had a slightly higher unemployment figure, 8.4 per cent. It is
not clear why the unemployment rate for engineering is higher and it seems rather at
odds with the recruitment experiences of many employers. Also, according to studies
of financial rates of returns for graduates, relative returns on engineering degrees rose
by 1.5 per cent after inflation during the 1990s while average returns for all graduates
were not above inflation (Hansen and Vignoles, 1999.). One possible explanation may
relate to the perceived poor quality of some engineering graduates who are more likely
to find difficulties obtaining employment. According to a DTI sponsored study
(DTI/CEL/Barclays, 1999) unemployed engineering graduates tend to be older, achieve
a lower class of degree and are less likely to have relevant work experience.
28
3.20 There is a need (expressed by the Engineering Council and employers) to improve the
work experience available to undergraduates, and also to newly graduating engineers.
As a consequence of the lack of ‘quality’ work experience provision, some engineering
graduates end up in non-engineering occupations, which can be interpreted as being a
loss of some of their investment in education. Some effort is being made to address
this through the development of Graduate Apprenticeships and transferable training
loans. The DTI study also highlighted the lack of work experience among graduates
from pure science programmes (eg physics, maths).
3.21 One issue affecting the quality of undergraduate education is the difficulty which
universities experience in recruiting sufficient young lecturers and researchers in
engineering. As shown earlier in Chapter 2, salaries are lower for engineers in
teaching, and the low stipends for PhD students have also been criticised as being
unattractive.
Flows out
3.22 An issue frequently raised by employers is that the best engineering graduates are
frequently ‘lost’ to the profession because of more attractive salary and career
opportunities offered by, for example, the City. Recent research by Mason (1999b)
confirms this trend exists to some extent, especially the flow of electronics engineers
into IT areas. The First Destinations of Newly Qualified Graduates Statistics (HESA,
1999) show that just over half of the engineering and technology graduates who enter
UK employment, go into professional level occupations and a further 14 per cent go
into associate professional jobs. Thus a substantial number take up other jobs, in
manager and administrator occupations (12 per cent) and a range of lower-level jobs
(19 per cent). These appear unrelated to engineering, though the available statistics
do not make it clear exactly what proportion is actually ‘lost’ to the profession.
By discipline, mechanical engineers are more likely to take up professional level
occupations than electronics engineers who are more likely to work in a wider range of
occupations (HESA, 1999). By sector, there is little evidence of a ‘drain’ of engineers
into the financial sector per se - only three per cent of the engineering and technology
graduates in 1998 who entered UK employment went into financial activities.
However, substantially more (26 per cent) joined the ‘business services’ sector (which
covers property development, retailing, business and research activities) and 33 per
cent joined manufacturing industry. Others were spread in small numbers across a
range of sectors. By discipline, electronics engineers and civil engineers were more
likely to join the business service sectors (around one-third of each did so) than other
engineers.
3.23 A specific type of flow is ‘brain drain’ - the leaving of highly qualified people to work
abroad, often in the USA. This has been a periodic feature of the highly qualified
scientific labour market, in particular specialists such as biotechnologists, particle
physicists, etc. In engineering it is less of an issue, though there have been well-
publicised cases of individuals (eg in electronics engineering, robotics, etc.) who have
left to work abroad, usually for considerably more money and better conditions. There
is also increasing potential for mobility across Europe. The outflow to the USA is
expected to grow, in particular in shortage areas such as IT skills, as it has recently
relaxed immigration rules to help ease problems in the domestic labour market.
29
3.24 There is also a kind of ‘reverse brain drain’ as many EPSRC-funded research assistant
posts at UK universities are filled by foreign nationals, from the EU, the Middle East
and South East Asia. These often then stay on to develop long-term careers in the
UK. This is because an academic career is less attractive to UK graduates who can
earn more in the engineering industry or business services, and many engineering
postgraduates do not stay in the academic sector.
3.25 Flows between regions within the UK are likely to be more of an issue, especially in
the relatively mobile professional level population. There have been problems in the
past relating to the North-South divide because of housing cost differentials.
Postgraduates
3.26 Postgraduate education represents a small proportion of the total supply at the higher
level (8,000 students out of the total of 35,000 in engineering, mostly on MA and
MSc courses or modules). But it has an important role in the advanced training of
engineers, in the maintenance of the research base in engineering, and also in
innovation through technology transfer.
3.27 Since the 1970s, the postgraduate sector has grown and changed substantially so
that it now encompasses a much greater variety of programmes and delivery
mechanisms (Jagger and Connor, 1998). There is much more part-time provision and
more short courses specifically geared to the needs of industry, and fewer one year
full-time MSc courses. The EPSRC, the main public funding source, plays a relatively
small role now in funding postgraduate training of engineers and it has moved over the
years to providing more flexible resources to universities for training. An increasing
volume of support comes from industry through student sponsorship, especially for
part-time study and for individual modules taken by employees as part of Continuing
Professional Development (CPD). The EPSRC’s newly introduced Masters Training
Packages are designed to reflect the changing requirements of employers and give
individual institutions/departments more flexibility in provision. This can include
support to a range of full-time and part-time courses, and modular study, provided
according to student and employer demand.
3.28 The EPSRC has also responded to demands, both at master and doctorate level, for
postgraduates to have more industrial experience and ‘broader’ skills, by introducing a
new Engineering Doctorate (EngDoc) scheme. This is designed for people seeking a
career in engineering research management. Doctorate students are based in (and
sponsored by) companies for four years, and the programme provides a blend of
research training and work experience. Established as a pilot programme in 1992 at
five centres, it has been expanded to ten centres since 1999, with 100 studentships
per annum. Further expansion is planned from 2001, with up to 150 studentships at
15 centres.
Training programmes
3.29 In addition to issues around formal qualifications affecting the skill base of the sector,
there are other aspects of supply relating to work-based or company provided training.
Modern Apprenticeship
30 3.30 Modern Apprenticeship (MA) was introduced to engineering in 1996. It is generally
regarded favourably, and seen as being more flexible than the traditional
apprenticeships, having potential for progression to higher qualifications. To date there
have been over 20,000 enrolments in the engineering manufacturing sector, which
represents around ten per cent of all MA starts. In addition, there have been
150/200 places per annum in the engineering construction sector (managed by
ECITB). The majority of MA recruits are male and they tend to be younger (more aged
16 and 17 years) than for the industry as a whole.
3.31 Numbers are perhaps not as high as EMTA and many in the engineering manufacturing
industry would wish (only around 7,000 new starts per year) and completion rates are
also quite low (32 per cent), though this figure is better than the average for all
sectors. These compare with much higher student numbers in colleges (see above)
and higher achievement rates of young people at Level 3 engineering qualifications.
In engineering construction, the MA is organised differently, with apprentices being
‘employed’ by the ECITB, and their training managed closely. Completion rates are
much higher (at 86 per cent), but here, too, there are concerns about the calibre of
intake, despite large numbers of applicants across the country (c.2000).
3.32 Reasons for low take-up are related to a number of factors. The main one is likely to
be higher staying on rates at 16 combined with the poor image of engineering and
work-based learning. The higher calibre potential apprentices opt to take further
qualifications (and are encouraged to do so by their schools and colleges). It is not
helped by the relatively poor (and in EMTA’s view often biased) careers advice and
guidance on engineering and work-based training in manufacturing given to young
people (see above). An additional negative factor is the age restriction at 19 years for
TEC funding. In the past, there may have been some antipathy towards MAs from
some employers because of their dislike of the NVQ framework (Senker, 1996) but
that is thought to be less of an issue today. However, some employers in the
engineering construction industry are concerned about the lack of flexibility of the NVQ
framework, especially at Level 3 which is the required output for MAs. More breadth
of competence, rather than the depth currently prescribed, would meet their needs
better.
Other training
3.33 There is a range of other training provided, both on and off-the-job, often done in a
more informal way (ie not leading to a qualification) and of short duration, which is
also a component of the supply side, and where there are issues affecting skill
deficiencies. It is not easy to find reliable statistics which show trends in the amount
of training being given to different occupations in engineering. The recent People
Skills Scoreboard (EMTA/EEF, 1999) provides some benchmarking data but the
coverage is still relatively small, though growing (505 companies employing 236,000
in 1999) and has existed for only two years. It suggests that:
q off-the-job training amounted to an average of £700 per employee, a figure that

has changed little since the previous year (when the first Scoreboard was
undertaken)
q training spend as a percentage of payroll was 2.7 per cent in 1999

q each employee received an average of 2.5 days per year off-the-job training, and 31
1.56 days on-the-job training
q the more dynamic, more technically complex, sectors, such as aerospace have the
highest investment in training while the basic metals and metal products sectors
have the lowest.
3.34 The EMTA 1999 survey also provides information on training. Almost two-thirds of
employers had funded or arranged training (off-the-job or on-the-job) for their
employees in the previous year. Almost half of these were small site employers (5-24
people). However, this does mean that half of the small companies in the engineering
sector are unlikely to be undertaking or funding any training, in contrast to the position
among the large companies where nearly all were funding or providing training for their
employees. Training occurred within all occupational groups but more companies
provided training to managers, admin/clerical staff, craft workers and
assembly/operator staff.
3.35 The statistics from the Labour Force Survey (LFS) also provide some evidence on
training activity. For those in the relevant engineering occupations (see Table A3.1),
the percentage receiving training in the previous 13 weeks ranged from 31 per cent of
those in professional level occupations to just 13 per cent for those at
assembler/operative level (Sep 99 LFS). On the whole, training activity declined as
skill level declined. By sector, there were some variations, especially between
manufacturing and the public sector (or previously publicly owned). Considerably
higher percentages of engineers working in public administration and defence and in
the public utilities (electricity, gas, water) reported being in receipt of training than
those in the engineering manufacturing sector. This was evident for professional,
technician and craft level occupations. There was very little difference between
different engineering sectors, however, with no evidence that hi-tech sectors such as
electronics were providing more training to their employees than more traditional
engineering sectors.
3.36 Looking over the last five years (1995-99), there is no discernible trend apparent in
the LFS data relating to training given to people in engineering occupations. While
there are slight variations from year to year, the percentages in the relevant
occupations receiving training from their employers have changed little over the period.
There are no comparable data available prior to 1995.
3.37 One of the impacts of the economic cycle (highlighted in Chapter 1) has been that
during times of recession, employers made cutbacks to training budgets, especially the
relatively long craft and technician training. In aggregate these have had a profound
impact on the supply of skills to the industry (Mason, 1999a). In particular the
closures of some large company training facilities during the 1980s recession, and the
reluctance of some of the large companies to continue previous practice and train in
excess of their needs, have been a major disadvantage to small firms. Recent
financial difficulties experienced by Engineering Group Training Schemes, which serve
to provide training to small firms, have added to the problem. The evidence from the
LFS relating to training differences between the public utilities, which on the whole are
more profitable than most of engineering manufacturing, add weight to the argument
which links attitudes towards training provision to profitability.
32
Recruitment and Skill Deficiencies

4.1 This section explores the extent and nature of skill gaps, based on the available
evidence on recruitment difficulties and hard-to-fill vacancies, and employer views
about the proficiency of their workforce. Evidence is drawn mainly from the EMTA
surveys and a sector analysis of the national Employers’ Skills Survey (ESS), as these
are the two main sources of quantitative evidence on engineering skill problems.
For this reason, this chapter is more focused on the engineering manufacturing sectors
than some of the previous chapters. Various NTO Skills Foresight reports and a
number of other mainly qualitative studies have also been used.
Historical overview
4.2 Traditionally, the main area of recruitment difficulty and skill shortage problems in
engineering has been in the craft and skilled trades. This is a recurrent theme in the
literature over many decades. It has been caused by a combination of events,
including: employer decisions to cut back on expensive craft training during periods of
deep recession (see end of previous chapter); the demise of the traditional craft
apprentice training route; the closure of large company off-the-job training centres
which specialised in foundation craft training; and the loss of many experienced and
skilled craft workers to other sectors during the recessionary periods (to take up other
jobs and these people did not return when the climate improved). There have also
been shortages highlighted from time to time in the professional and technical 33
occupations (eg electronics and software engineers in the first IT boom in the late
1980s). In recent years, several reports have highlighted worsening problems at
associate professional level (ie technician engineer) (see for example DTI and
Engineering Council). Another area giving concern is the lack of generic skills of
managers (see ECITB Skills Foresight report).
Recruitment and vacancies

4.3 A range of different sources of information has been drawn on to provide an overall
picture of the level of recruitment and where difficulties are experienced. The various
surveys ask different questions, have varying coverage and have been conducted at
different times. The timing of a survey is perhaps particularly crucial, as the level of
recruitment and, very importantly, recruitment difficulties, is cyclical. There is,
however, evidence that, given competitive pressures and the impact of technological
and organisational change, recruitment difficulties are more deep-seated. Even at
times of relatively low recruitment, the filling of certain types of vacancy remains
problematic.
4.4 The EMTA annual surveys collect information on the extent of recruitment in
engineering manufacturing. In the year up to February 1998, 66 per cent of
establishments had recruited some staff; 63 per cent in the following year. A labour
market survey conducted for the rail industry in late 1998 reported 69 per cent of
respondents recruiting in the previous year (RITC, 2000).
4.5 Another way of looking at recruitment is the number of employers with vacancies at a
particular point in time. The EMTA surveys found a slight decline in the proportion of
employers with vacancies at the time of the survey; 21 per cent in 1999 compared to
28 per cent in 1998. The national Employers’ Skills Survey (ESS) showed that 27 per
cent of engineering manufacturing establishments had some vacancies at the time of
the survey (late 1999), compared to 32 per cent of the whole sample (ie employers
across all sectors). This suggests a slightly lower level of recruitment activity in
engineering, which is what would be expected given its greater economic difficulties
(see Chapter 1). As expected, larger establishments were more likely to report having
vacancies and also larger numbers of vacant positions.
4.6 Employers in the ESS were more likely to be recruiting at craft and operative level than
in other occupational areas (Table A3.6 in Appendix 3), but this is linked to the higher
levels of employment in these occupations. When the number of vacancies is related
to the number employed in each occupation, a fairly consistent level of recruitment
appears to be occurring across all occupations. Vacancies represented between one
and three per cent of employment in each occupation.
4.7 In total, an estimated 25,000 vacancies were reported by engineering employers in

the ESS (weighted data). This represents 1.8 per cent of total employment. This is
lower than the equivalent figure for all industries (3 per cent).
4.8 Electronics had similar vacancy levels overall compared with engineering as a whole,
but at an occupational level more differences were evident:
q vacancies at engineering professional level represented 13 per cent of total

34 vacancies in electronics compared with 8 per cent in the rest of engineering
q vacancies for assembly/line workers represented 15 per cent of vacancies in

electronics compared with 10 per cent in the rest of engineering.
Recruitment difficulties
4.9 Of greater interest for this Dialogue are the extent and nature of difficulties in
recruitment rather than vacancy levels. The majority of surveys use hard-to-fill
vacancies as a proxy for this. While hard-to-fill vacancies are clearer to define than
‘skill shortages’, there is still some ambiguity around their definition. For example, in
the ESS, employers reporting hard-to-fill vacancies were asked ‘broadly speaking how
long has a vacancy in each occupation lasted’, and a pattern of considerable variation
emerged:
q Eight per cent of employers with hard-to-fill vacancies for professionals reported
that they had taken up to one month to fill, 53 per cent one to three months and
18 per cent more than six months.
q Sixteen per cent of employers reported that their hard-to-fill vacancies for
technicians took up to one month to fill, 21 per cent more than six months.
q In craft occupations, 22 per cent of employers reported hard-to-fill vacancies taking

up to one month and 30 per cent more than six months to fill.
q By contrast, the majority of operative vacancies (42 per cent) lasted up to one
month and 11 per cent more than six months.
4.10 This does raise the issue of what is meant by hard-to-fill vacancies. Do they take
longer to fill than usual for a vacancy in that occupation; are they filled, but by people
who are not fully suitable; is extra effort required to fill these posts? Not all hard-to-fill
vacancies are caused by skill related reasons (see below), they may be due to, for
example: the company’s location, pay being offered, employment conditions or working
hours.
Level of hard-to-fill vacancies

4.11 Between the EMTA surveys in 1998 and 1999, there was a reduction in the proportion
of engineering employers reporting hard-to-fill vacancies, from 49 to 32 per cent.
But according to ESS, a smaller proportion of engineering employers has hard-to-fill
vacancies: 16 per cent. ESS was conducted later than the 1999 EMTA survey and
the lower level of hard-to-fill vacancies may indicate a further decline in the buoyancy
of the sector1. Engineering employers reported almost 12,000 of their vacancies as
being hard-to-fill, 46 per cent of all vacancies (ESS data).
4.12 The proportion of engineering employers reporting hard-to-fill vacancies in the

engineering sector was the same as for all employers in the ESS; so too were the
relative proportions of vacancies that were hard-to-fill ones. Similarly, comparing
employers in the 1999 EMTA survey (25+ employees) with all employers in the Skill
Needs in Britain Survey (IFF, 1998), shows similar levels of hard-to-fill vacancies.
This suggests that recruitment difficulties overall are not any greater in engineering
compared to other sectors. Nevertheless, having around one-sixth of engineering
35
employers reporting hard-to-fill vacancies at a time when the sector is not particularly
buoyant is a serious issue and may suggest possibly more deep seated issues around
the availability of skills. Some of the establishments in the ESS case study research
reported that they were currently in the trough of a recession and that if demand
picked up to any significant extent, then they expected recruitment problems to
significantly intensify.
Sector differences
4.13 Employers in different sub-sectors of engineering are experiencing varying levels of
recruitment difficulties, and also different kinds of difficulty. The 1999 EMTA survey
found that employers in the motor vehicles sector were most likely to have hard-to-fill
vacancies, followed by mechanical equipment and electronics. A SBAC study,
conducted in 1997 in the aerospace sector, reported 62 per cent of employers having
hard-to-fill vacancies over the past 12 months and 53 per cent at the time of the
survey (SBAC, 1998). The ESS, however, showed very little difference between
electronics and the rest of engineering both in the proportion of employers reporting
hard-to-fill vacancies and in the proportion of vacancies reported that were hard-to-fill
ones. This seems somewhat at odds with reports from electronics employers of the
greater difficulty being experienced there. However, more detailed analysis at an
occupational level shows a different picture.
Occupational differences
4.14 Looking in more detail at the ESS analysis by occupation, a fairly consistent picture
emerges relating to differences between occupations (see Table 4.1). There are four
occupations where the greatest difficulties are being experienced:
1 The much higher proportion of employers reporting hard-to-fill vacancies in the EMTA survey might also be partly
attributable to differences in sampling and coverage between the two surveys.
Table 4.1: Distribution of hard-to-fill vacancies by occupation in the engineering

sector
Employers with Base: number Hard-to-fill vacancies Base: number

hard-to-fill vacancies of employers as a percentage of of vacancies
as a percentage of with vacancies vacancies in each
those with vacancies occupation
in each occupation
Managers and administrative 48 862 43 1,314
Professional 51 946 53 2,418
Technical and scientific 47 862 49 1,833
Clerical and secretarial 34 1,083 26 1,660
Craft and skilled operative 64 3,011 65 6,384
Sales 37 938 38 1,799
Operative and assembly 51 2,679 37 8,905
Other manual 44 343 35 1,003
Source: ESS, 1999
36
q craft (65 per cent of vacancies are hard-to-fill)
q professional (53 per cent)
q technical/scientific (49 per cent)
q managers (43 per cent).
4.15 This generally reflects the findings of the EMTA surveys: the majority of hard-to-fill
vacancies identified there were in technician, craft and professional occupations.
The main difference is the lower level for managers. EMTA (1999) attribute this to the
greater likelihood of managers being recruited internally. However, both the EMTA
survey and the ESS survey vary in their depth and coverage, which also may explain
the different responses.
4.16 Table 4.1 illustrates how different measures or indicators of the importance of hard-to-
fill vacancies can provide varying pictures. For example, although a relatively high
proportion of employers reported hard-to-fill vacancies in operative jobs, when the
actual number of hard-to-fill vacancies is related to vacancies in these jobs, they
appear as less problematic. This suggests that problems in filling operative jobs are
more widespread across employers but are of lesser importance overall. This can also
be seen in Table 4.2 where vacancies and hard-to-fill vacancies in each occupation
are expressed as a proportion of the total for each category. This indicates the greater
problems in craft and skilled trades in particular (25 per cent of all vacancies are in
craft occupations but 35 per cent of hard-to-fill vacancies).
Table 4.2: Employment, vacancies, hard-to-fill vacancies and skill shortages by

occupation, for the engineering sector (percentages)
Employment Vacancies Hard-to-fill Skill

vacancies shortages*
Managers and administrative 13 5 5 4
Professional 11 10 11 14
Technical and scientific 7 7 8 10
Clerical and secretarial 9 7 4 3
Craft and skilled operative 24 25 35 40
Sales 4 7 6 6
Operative and assembly 27 35 28 21
Other manual 7 4 3 2
Total numbers 1,434,571 25,350 11,727 6,726
* hard-to-fill vacancies which are due to one of the following skill related reasons: low number of applicants with
required skills, lack of work experience, lack of qualifications company demands.
Footnote: All percentages do not add to exactly 100, due to rounding.
Source: ESS, 1999

37
4.17 Although there appears to be little difference between electronics and the rest of
engineering in the overall incidence of hard-to-fill vacancies (see above), differences
emerge at a more detailed occupational level. Table 4.3 shows the incidence of
recruitment difficulties by expressing hard-to-fill vacancies as a percentage of
vacancies for each engineering occupation by sector. It also shows the total number
of hard-to-fill vacancies. Engineering occupations have been identified at a SOC92
two-digit code level. While some of these codes have wider boundaries than
engineering skills (eg SOC30 includes scientific technicians, IT staff) they are the best
that can be used at this level (three digit SOC breakdown produces too small
numbers).
4.18 Comparing electronics and the rest of engineering, it is clear that recruitment
difficulties are greater for electronics companies at professional level and also for
electrical and electronic trades, although similar for other engineering occupations
(Table 4.3). Looking beyond the engineering manufacturing sector to other
manufacturing, construction and business and IT services, where engineering skills are
also required in significant numbers (see Chapter 1), shows that:
q At professional engineering level, recruitment difficulties are greater in electronics

and construction than elsewhere.
q Construction appears to be suffering considerably more than other sectors for all
engineering occupations, and especially in electrical, electronic and metal forming,
welding trades.
Table 4.3: Hard-to-fill vacancies as a percentage of vacancies in engineering

occupations in different sectors
Electronics Rest of Other Computer & Construction

engineering manufacturing business
services
Professional - engineering technical
61 49 45 47 62
(SOC21)
Assoc prof/scientific technicians
50 49 35 56 69
(SOC30)
Metal machining, fitting etc. (SOC51) 57 51 66 58 67
Electrical/electronic trades (SOC52) 94 74 * 61 86
Metal forming, welding, and related
* 75 60 * 88
trades (SOC53)
Metal working process operatives (SOC84) * 62 67 * *
Assemblers/ lineworkers (SOC85) 37 38 52 74 *
All of the above engineering occupations 58 56 53 55 82
Total number of hard-to-fill vacancies
1,553 5,767 2,379 4,877 5,783
38 in these engineering occupations
Total number of hard-to-fill vacancies 2,650 9,286 22,885 32,181 19,223
* too small cell size, fewer than 250 vacancies (weighted)
Source: ESS, 1999
q Other manufacturing and computer and business services also have more problems
in these craft trades than other occupations.
q Computer and business services appear to have more recruitment problems in

assembly work, than at the professional engineering level.
4.19 It is worth noting however, although these other sectors require engineering skills, the
level of hard-to-fill engineering vacancies compared to all of their hard-to-fill vacancies
is considerably lower than that for the engineering manufacturing sector.
Graduate recruitment difficulties

4.20 There are frequently reported difficulties by graduate recruiters in engineering and
technical disciplines (see for example, AGR annual surveys). In a recent survey of
employers of technical graduates covering a number of sectors (Mason, 1999c),
41 per cent of recent recruiters reported they had some difficulty in meeting their
recruitment targets. Employers experiencing the most serious difficulties were in
electronics, with 20 per cent reporting it was very difficult to meet recruitment targets
compared with 11 per cent for all recruiters, and just 5 per cent in the financial sector.
The main disciplines in shortage for most sectors were electronics, IT and computer
science. Similarly, the main areas of technical expertise lacking were software, IT and
electronics.
Table 4.4: Main causes of hard-to fill vacancies by occupation, identified by

engineering employers (percentage of employers citing each reason)
Low number Low number Lack of work Lack of

of people with of applicants experience qualifications
required skills generally
Managers 42 28 33 6
Professionals 56 26 21 13
Technician/ scientific 45 23 30 9
Craft 50 27 25 13
Operative 42 31 23 6
Source: ESS, 1999 (see more detail in Table A3.8)
Skills related hard-to-fill vacancies

4.21 A number of themes emerged when employers in the ESS were asked the reasons for
hard-to-fill vacancies, but the main one related to skill shortages. The three causes
identified as being more important to employers than the others (see Table A3.8 and
Table 4.4) are:
39
q Low numbers of applicants with required skills (rather than qualifications) - this
affects most occupations but especially professional and craft, over 50 per cent of
employers (Table 4.4).
q Low numbers of applicants generally - again affecting most occupations (26-31 per
cent of employers).
q Lack of work experience - particularly for sales (40 per cent), and also manager
and technician vacancies (one-third).
4.22 A fourth cause, lack of people with required qualifications, also featured as being of
importance, but less so than the three identified above. Other causes were irregular
and anti-social hours when recruiting managers, professionals and technicians, and
attitudinal and motivational issues in relation to managers, sales and operative
applicants (Table A3.8).
4.23 Taking the skill-related reasons together (ie low number of applicants with required
skills, lack of work experience, and lack of qualifications employers demands) and
applying them to the hard-to-fill vacancies reported, gives greater emphasis to the
problems at professional, technician and craft occupations level (see Table 4.2).
Three-quarters of hard-to-fill vacancies in professional and technician occupations, and
almost two-thirds in craft and skilled trades were attributed to ‘skills related reasons’.
This compares with 42 per cent in operative and 44 per cent in clerical work.
4.24 The EMTA surveys also asked employers with recruitment difficulties about the reasons
for these. Although it is difficult to make direct comparisons with the ESS results, the
overall themes are similar:
q the majority of EMTA survey respondents attributed their difficulties to a lack of

applicants with the required qualifications and skills (53 per cent of those with
recruitment difficulties);
q this was followed by a general lack of applicants (24 per cent) and applicants
lacking the necessary work experience (18 per cent).
4.25 The SBAC survey in aerospace (SBAC, 1998) also provides a similar picture, with the
main reasons for recruitment difficulties being ‘not enough suitably skilled people,
people lacking practical skills and a lack of people interested in the type of work’.
This study also identified competition from other employers as a cause of recruitment
difficulties.
4.26 ECITB in their Skills Foresight report (ECITB, 2000) identify the main areas of skill
shortage in recruiting craftspeople to onshore sites, especially in key trades such as
welders and pipefitters. Offshore, the calibre of applicants to supervisory and other
senior positions is also reported as a concern, as is a shortage of highly specialised
engineering skills in head office functions.
40 Pay levels
4.27 Changes in pay levels can also be used as an indicator of trends in the labour market
for certain occupations. In particular, a tightening of the labour market can be
indicated by high wage inflation. There are various sources of information on pay
levels of engineers, covering different groups of workers and different time periods
though little of what is available supports the evidence of skill shortages among
different engineering groups. It mainly highlights differences between electronics and
other engineering sectors, and also shows the wide range of pay levels for different
occupational groups, especially those in professional engineer jobs.
4.28 Taking the whole of engineering first, the level of pay settlements reported by EEF
member companies (covering a wide range of engineering activities, wider than
manufacturing) remained relatively stable over the last six months (EEF, 2000).
The three month moving average was at around 2.6 per cent (just above the
Government inflation target of 2.5 per cent). There has been a high level of reported
pay freezes in engineering, averaging one in six of all settlements, which are thought to
reflect the more difficult economic climate of the last 12 months or so.
4.29 Throughout the 1990s, pay settlements in engineering have been below those in the
wider economy, and since 1996, the gap between pay settlements in engineering and
the services sector has grown.
4.30 Earnings data for different groups of engineering employees show that:
q The largest increases in the six month period (March-Sep 99) have been in the
electrical and electronic equipment sectors (based on NES data reported in EEF,
2000), supporting other evidence of more shortage problems there.
q Among professional engineers, electrical engineers were the highest earning group
(average gross including overtime, £32,000) followed by software and electronic
engineers (£31,000), both occupations in high demand.
q Engineering directors received the highest increases in average earnings (ten per
cent), and their average salary was just over £66,000. The highest bonus
payments (as a percentage of salary) were also concentrated at the top end of the
pay structure (REL, 1999).
q The Reward Group’s latest survey on the electronics industry showed that pay
awards averaged four per cent over the year to August 1999. The median salary of
directors was a little over £73,000, while supervisors/senior technicians earned
£17,000. As might be expected the range of salaries was much greater at the
higher end of the pay structure.
q The Reward Group’s survey also showed that, at all levels, pay in the software
industry was higher than in the electronics components industry. The lowest paying
electronics sector was automatic test equipment. Directors working on computer
software earned 28 per cent more on average than their colleagues in electronics
components.
q Analysis of data from the New Earnings Survey over time (1989-98) shows that
wage increase levels for engineering occupations have shown a similar pattern to all
occupations of initial relatively high increases in the 1989-91 period and then 41
rapidly falling away during the early 1990s with a slight recovery from 1995.
There are variations between engineering occupations with, in some years, wage
level increases generally above the all occupation average, and in others below it,
but with no obvious trend patterns over time.
q Comparisons over time (1989-1999) with all occupations show that median
earnings of Chartered Engineers have grown at around the same rate as all
occupations but median earnings for Incorporated Engineers have grown more
slowly.
q The Engineering Council’s most recent survey in April 1999, showed a considerable
salary differential between Chartered Engineers (average salary of almost £45,000)
and Incorporated Engineers (£33,000) and Engineering Technicians (£29,000).
Earnings of Chartered Engineers however varied considerably by type of work with
the highest median pay reported by Directors/Chairmen (£54-56,000) and the
lowest by those in teaching (£32,000), maintenance repair (£32,000) and design
work (£33,000). (Earnings here are basic salary plus bonuses).
q Compared to the salaries of other professional groups, salaries of Chartered

Engineers are on a par with those of architects. Although salaries have been
growing fast in the IT industry, average salaries of systems development people are
still below that of Chartered Engineers.
q The Institution of Electrical Engineers (IEE) Salary Survey shows that nearly a
quarter of their members work in the electronics, computer and
telecommunications equipment industries but these are not the most highly paid
(total median remuneration £35,700). Pay was highest for members in the
financial services sector (£50,000) though this represented only a tiny proportion of
members, and also high for those in broadcasting, telecommunications and postal
services where membership is greater (£44,000). It was lowest in the electrical
machinery and equipment sector (£31,000).
q Recent research on wage relativities of engineering and computer science

graduates shows that both groups earn a relatively large wage premium compared
to some other degree subjects (notably arts and humanities) but similar in
magnitude to that for physical science, and lower than the top earning subjects of
medicine and mathematics (McIntosh, Hanson and Vignoles, 2000).
q But the same research also found clear evidence that the relative wage premium
for an engineering/technology degree has increased during the 1990s at an
approximate rate of 1.5 per cent above the rate of inflation. As overall graduate
wages have been keeping pace with inflation, and taking into consideration the
reduction in supply of engineering graduates and continuing high demand
(highlighted in earlier chapters), it suggests that market forces have been operating,
improving the attractiveness of engineering in terms of earnings.
4.31 There are no separate data relating to pay trends for craftsmen/women which provide
any evidence in support of shortages there.
42
Skills required
4.32 The ESS goes further than simply identifying hard-to-fill vacancies, exploring in more
detail the skills which are hard to find. A number of points emerge from asking
employers which skills in particular they find hard to find in different occupations. Key
findings are shown in Table 4.5 and the full analysis in Table A3.7 in Appendix A3.
The main points are:
q The overriding evidence of a lack of technical and other practical skills, in almost all
occupations, but especially in the professional, technical, craft and operative
occupations.
q A lack of advanced IT and software skills amongst technicians, and also managers
and professionals. A lack of basic computer literacy amongst clerical and sales job
applicants.
q The relative importance of deficiencies in communication skills, among managers,

but also clerical and sales applicants; also, customer handling, numeracy and
problem solving skills.
q A shortage of managerial skills amongst applicants to managerial jobs.

q Applicants to sales jobs seem to lack the widest range of skills, including those
generally regarded as core to selling, for example, communication, technical and
customer handling skills. Management, numeracy, problem solving and basic
computer literacy were also reported to be lacking.
Table 4.5: The skills that engineering employers find it most hard to find in manager,
professional, technician and craft occupations (full details for all skills that are hard
to find and all occupations shown in Table A3.7)
Managers Professional Technicians Craft

Advanced IT and software skills 14 15 30 6
Other technical and practical skills 59 47 74 73
Communication skills 36 8 9 11
Team working skills 23 8 6 15
Problem solving skills 29 15 14 16
Management skills 43 13 13 6
Source: ESS, 1999
q A close association identified between the skills reported to be lacking in applicants

and those reported to be increasingly needed (see Section 2.27, Skill Trends).
4.33 Other studies look at the nature of hard-to-fill vacancies in different ways. For
example, the SBAC 1998 study reported that hard-to-fill vacancies were almost
exclusively in the engineering area, and the most commonly mentioned were: CNC 43
machinists, software engineers, skilled technicians and design engineers. The ESS
case study report (Shackleton et al., 2000) concluded that the recruitment of shop
floor employees was largely not a problem, with recruitment being confined to local
labour markets. The main problems were at higher-level occupations, particularly
professional engineering graduates with four to five years commercial experience.
There was a shortage of professional engineers with a combination of specific
technical skills, commercial awareness, project management skills and other ‘soft’
people management skills. It also found that the labour market was very tight for
particular engineering specialisms, including systems analysts and design engineers,
creating high wage inflation. A small scale study of the electronics sector (covering 15
companies) identified production technicians, GSM engineers, IT engineers and design
engineers as being in short supply and constraining business (Senker and Brown,
1998).
4.34 The available information on recruitment difficulties suggests both a number of

common themes, but also diversity across the sector. There is a general theme of
there being a lack of suitably skilled and experienced people in the labour market.
Although ‘generic skills’ or Key Skills are reported to be lacking, there is a consistent
picture across all occupations of a lack of technical and practical skills. While some
studies have started to analyse in greater detail the nature of these skill needs, more
information is needed from employers about what skills, of a specific technical nature
and for which jobs, are really in short supply. It is in this respect that there is diversity;
in the technical and practical skills needed by different occupations and in different
sectors. It should be acknowledged, however, that it can be difficult for employers to
define precisely what kind of technical skills are likely to be needed two or three years
ahead, especially in fast moving electronics and IT areas. This is why it is important to
ensure that people have a base of skills and underpinning knowledge so that they can
readily retrain to meet the needs of new technological developments.
Impact of recruitment difficulties

4.35 Hard-to-fill vacancies across most occupations, not just in the most skilled and higher
level occupations, cause difficulties for engineering employers in relation to various
aspects of business (Table A3.9). Several important areas are identified from the
ESS:
q delays in developing new products

q loss of business or orders to competitors
q difficulties in meeting customer service objectives
q increased operating costs.
Very few employers reported that hard-to-fill vacancies had no impact.
4.36 The ESS engineering case study report (Shackleton et al., 2000) reported the crucial
importance of product innovation for long-term survival, and these data give some
support to this. Delays in developing new products were reported as a consequence
44 of hard-to-fill vacancies in nearly all occupations by between 40 and 56 per cent of
employers with such vacancies (see Table A3.9).
4.37 Recruitment problems among sales, professional and technical staff had an impact on
maintaining shares of business and competition: 51 per cent of employers reported an
impact here of hard-to-fill sales vacancies, as did over 40 per cent in respect of hard-
to-fill craft, technician and professional level vacancies. The growing importance of
meeting customer requirements is also confirmed in the ESS. Over 50 per cent of
engineering employers reported an impact on meeting customer service objectives of
having hard-to-fill vacancies in manager, technician, craft and operative occupations.
4.38 The ESS data also confirm that vacancies at all levels are expected to impact
negatively on performance and competitiveness now and in the future. Similar themes
arise as those highlighted above, though increased operating costs appear as more
important. This may reflect the current preoccupations of many businesses with price
competition, which is adversely affecting their business performance.
4.39 The consensus of opinion among electronics employers surveyed by Senker and Brown
(1998) was that the UK remained a ‘favoured location’ for high technology
investments. However, there was growing concern that perceived shortages of labour,
in particular a decline in the output from the education system and the quality of
engineers being produced, might compromise this. Multinationals might look more to
investing in new plant in other countries rather than in the UK.
Skill gaps
4.40 The other aspect of skill deficiencies is the existence of skill gaps amongst those
already employed by an organisation. Given the extent of change in technology,
working practices and skill needs, it would be surprising if there were not some
element of deficiency amongst employees. Skill gaps in some establishments might
be seen as a positive indicator of dynamism and change, as skill acquisition is unable
to keep up with the speed of technological, product and organisational change.
However, it is usually viewed more negatively as a limiting factor on businesses.
4.41 Just over one-quarter (26 per cent) of employers in the 1999 EMTA survey reported
the existence of a gap between the skills of their current workforce and those needed
to meet their objectives. This was slightly lower than in 1998 (32 per cent). Again,
this is perhaps a surprisingly low percentage given the evidence from other studies
that skill gaps have been having a detrimental effect on the engineering sector’s
success and progress. Those employers reporting a skills gap were asked in which
occupations these gaps were having the greatest impact on the business:
q 43 per cent reported craft occupations

q 25 per cent operators and assemblers
q 23 per cent technicians
q 15 per cent professionals 45
q 11 per cent managers.
Table 4.6: Extent to which employees in each occupation are fully proficient at their
job (row percentages, each row is based on establishments with that particular
occupation)
All Nearly all Over half Under half/

very few
Managers 65 26 7 2
Professionals 69 25 5 2
Technical and scientific 65 27 6 2
Clerical 70 23 5 2
Craft and skilled operative 57 33 9 1
Sales 66 27 6 2
Operative 52 36 10 3
Other manual 6 26 7 2
Source: ESS, 1999
4.42 Again, these data need to be interpreted in the context of employment distribution.
A smaller proportion of establishments employ professionals and technicians rather
than craft and lower-skilled employees, and the concentrations of employment in
specific occupations vary, and therefore to some extent so does their perceived
importance to an employer. It is not possible to look at this in the EMTA survey
analysis. The evidence from other sources suggests that the importance given to
problems at craft and operator level may be overstated in the EMTA survey and the
technician and professional problems understated. However, in the engineering
construction industry it is clear from the ECITB’s research that the main weaknesses
are seen across a range of craft areas including welding and pipefitting, and in the
flexibility of skills.
4.43 The ESS approaches this issue differently, looking at the extent to which employers
think that staff in each occupation are fully proficient. Generally high levels of
proficiency were reported amongst all occupational groups (Table 4.6). A lower
proportion of employers said that all their craft and operative employees were
proficient when compared with their other workers. The SBAC survey conducted in
1997 in the aerospace sector found that 30 per cent of respondents believed that the
skill levels of their employees were ‘medium to low’ and 25 per cent that the quality of
their employees was ‘medium to low’ (SBAC, 1998).
4.44 It has been questioned whether managers are fully able to report the extent of skill
deficiencies, in particular amongst themselves. A circular situation can arise, whereby
46
some managers do not have the necessary skills and abilities both to take an
organisation forward and to identify skill gaps amongst their workforce. Indeed, the
ESS engineering case study report (Shackleton et al., 2000), concludes:
‘Nearly all the case studies recognised that they had skill deficiencies within their
organisations but it was evident that certain of the case studies found it difficult to
articulate the extent of these gaps and the reasons why these skill gaps had arisen.
... The fact that very few of the case studies identified that they were experiencing
management skill gaps is perhaps indicative of the fact that these crucial skill areas
may well remain unnoticed at the establishment level.’
4.45 When seeking evidence of specific skill shortages, the EMTA surveys illustrate the
importance of shortages in technical and engineering skills. Deficiencies in technical
and practical skills were most commonly reported in all engineering sub-sectors, which
suggests a wide range of specific needs (see Table 4.7). Very few studies have really
addressed these sector specific needs. The 1999 survey did explore technical
deficiencies in greater detail. The most commonly reported skill gaps were CNC
machine operations; mechanical engineering and CAD/CAM/CAE.
4.46 The ESS asked those respondents who did not report all or nearly all of their employees
as being fully proficient a series of questions to explore the nature and impact of this
lack of proficiency (but, as Table 4.6 shows, the proportion of engineering employers
who were asked this question was very small). Nevertheless, some interesting points
emerge relating to where there was a lack of proficiency overall (though it is not
possible to undertake a sectoral breakdown, as in Table 4.7, with these ESS data):
Table 4.7: Areas of skill deficiency in existing workforce reported by engineering

employers, analysed by sector (numbers in brackets are percentages of
establishments reporting skill gaps)
Metal products 1. Practical skills (68) Electrical 1. Practical skills (55)

2. Multi-skilled employees (41) engineering 2. Computer literacy (42)
3. Skilled craftspeople (40) 3. Communication skills (39)
4. Computer literacy (30) 4. Management skills (35)
5. Communication skills (24) 5. Personal skills (32)
6. Personal skills (23) 6. Skilled craftspeople (29)
Mechanical 1. Practical skills (63) Motor 1. Practical skills (67)
engineering 2. Computer literacy (41) vehicles 2. Multi-skilled employees (44)
3. Communication skills (34) 3. Problem-solving skills (42)
4. Management skills (29) 4=. Communication skills (41)
5. Skilled craftspeople (26) 4=. Computer literacy
6=. Personal skills (25) 4=. Personal skills (41)
6=. Problem-solving skills (25)
Electronics 1. Practical skills (53) Aerospace 1. Practical skills (54)
2. Computer literacy (39) 2=. Computer literacy (38)
3. Communication skills (34) 2=. Problem-solving skills (38)
4. Management skills (33) 4. Skilled craftspeople (35)
5. Personal skills (32) 5. Management skills (32) 47
6. Problem-solving skills (27) 6. Communication skills (29)
Source: Mason, 1999a derived from EMTA (1998, Table 6.4)
q A failure to train and develop staff: reported most frequently, and across nearly
all occupations. In particular it was reported as the most important cause of a lack
of proficiency amongst managers, professionals, technical and scientific staff, sales,
operative and other manual employees.
q The introduction of new products or services, new working practices and

new technologies: the next three commonly reported causes. These were
generally important reasons for a lack of proficiency across all occupations but were
slightly less important amongst sales and other manual employees. The
introduction of new technology was the most important reason amongst clerical
employees.
q Recruitment problems, poor labour retention, inability of workforce to keep

up with change, and inability of older staff to acquire necessary knowledge
and skills: these factors were reported by between one-fifth and one-third of
employers in each occupation.
4.47 The types of skill deficiencies amongst existing employees were on the whole similar to
those found in relation to hard-to-fill vacancies. However, technical and practical skills
were reported to be lacking amongst specific occupations, rather than across the
board. They were most likely to be lacking amongst professional, technical, craft and
operative staff; those most closely involved in the design, innovation and production
processes. Also, employees across all occupations were reported to be lacking a
range of generic skills. For example:
q Between one-third and half of employers thought that employees in each

occupation lacked problem solving skills.
q Sixty per cent reported a lack of proficiency in management skills amongst

managers. Between one-fifth and one-third reported a lack of management skills
in other occupations.
q Communication skills were thought to be lacking by 61 per cent amongst

managers, 50 per cent amongst sales employees and between one-third and 47
per cent in all other occupations.
q One-quarter reported a lack of literacy skills amongst operatives and one-fifth

amongst other manual employees.
These internal skill deficiencies again include many of the skills which are reported to
48 be increasingly important amongst engineering employers.
4.48 Case studies and qualitative studies have explored these issues in greater depth, and
similar themes emerge though rather more emphasis is generally put on the non-
technical skill deficiencies than it is in the survey data. The ESS case study research
(Shackleton et al., 2000) identified skill gaps relating mainly to intermediate/
technician occupations, team leaders, management and professional occupations.
At the intermediate/technician level, these ‘team leader’ skills included motivational
skills, communication skills, an ability to forward think and to think strategically. At the
professional and managerial level, the skills gaps were associated with people who did
not have the required combination of technical and non-technical skills. In the non-
technical skills area, skills identified were project management and people
management skills and possessing a rounded level of commercial awareness. More
serious, possible emergent, skill gaps were seen as being senior management’s ability
to drive the business forward and transform business systems (eg manufacturing
processes) for competitive advantage. Themes emerging from other studies include:
q improve communication skills, and develop leadership skills and change

management skills in the aerospace sector (SBAC, 2000); and
q project management, and a lack of leadership particularly, at high levels in head

office companies in the engineering construction industry. This includes the inability
of senior managers to recognise skill needs, weaknesses in generic management,
and a failure to develop older engineers to get the best out of the available new
technology (ECITB, 2000).
4.49 As in the recruitment problem area, there is relatively little detailed information on the
precise gaps in ‘technical and practical skills’. What evidence there is suggests that
these vary by occupation, sector and individual employer. Interviews conducted for the
West Midlands Automotive Skills Taskforce do provide more detailed information on the
nature of technical skills needed, although these relate only to one sub-sector. These
included: assembly techniques; ergonomics; robotics; diagnosis; maintenance and
repair; spot welding; process and production management.
Impact of skill gaps

4.50 The impact of skill gaps can be difficult to identify, and may not emerge for some time.
It can be relatively straightforward to identify deficiencies at production level, due to
deadlines not being met, high levels of wastage etc. but other deficiencies are less
easy to identify. Their impact might not be obvious until a company flounders, or loses
market position. Furthermore, given the many pressures experienced by the industry,
identifying the contribution of skill deficiencies is complex.
4.51 As with the impact of hard-to-fill vacancies, there were some differences between the
impact of internal skill deficiencies between occupations in the ESS. When
engineering employers were asked about how a lack of proficiency in each occupation
was affecting the establishment, some themes emerged:
q Skill deficiencies were most commonly causing difficulties in meeting customer

service objectives, and this was caused by deficiencies in all occupations. 49
q Increased operating costs and delays in developing new services were the next
most commonly reported impacts. Deficiencies amongst operatives were most
frequently reported to be leading to increased operating costs.
q A loss of business or orders to competitors was being caused by between one-fifth

and one-quarter of employers with deficiencies in most occupations. However, 38
per cent with deficiencies in managers and 57 per cent in sales employees
reported this negative effect.
q Difficulties in meeting quality standards were reported by between one-quarter and

one-third of employers experiencing deficiencies in each occupation.
4.52 Table 4.8 illustrates the possible future impact of skill deficiencies. These data suggest a
lesser impact than current deficiencies. However, the question was asked in a different
way, and employers might rationalise their response. Over four-fifths reported that none
of the possible impacts would occur as a result of skill deficiencies. Nevertheless, the
data in Table 4.8 do suggest a range of negative impacts on the performance of more
than half of engineering employers over the next few years. The anticipated impact of
skill deficiencies is slightly greater in engineering compared to all sectors in the economy.
Table 4.8: Impact of skill deficiencies over the next two or three years
Engineering (%) All employers (%)

Increased operating costs 33 26
Difficulties meeting customer service objectives 32 29
Loss of business or orders to competition 28 22
Delays developing new products or services 27 19
Difficulties introducing technological change 22 16
Difficulties meeting required quality standards 20 22
Difficulties meeting new working practices 20 18
Withdrawing from offering certain products or
14 11
services altogether
None of the above 43 49
Weighted base 30,545 533,572
Source: ESS, 1999
Looking to the future

4.53 Much of the data on recruitment difficulties and skill deficiencies groups ‘technical and
50
practical skills’ into one category. The 1999 EMTA study does begin to unpack this,
however, the number of respondents becomes very low when this is done. It is
identifying the precise technical and practical skills which will be needed in the future,
especially if, or as, different sub-sectors grow and decline. What is also clear from the
data reviewed is that the range of generic skills, identified to be of growing importance in
Chapter 2, will remain important.
Table 4.9: New or additional skills needed to move to higher quality product
Engineering (%)
Technical and practical skills (non-IT) 71
Team working skills 64
Management skills 56
Problem-solving 54
Customer handling 54
Communication skills 50
Basic computer literacy 43
Advanced IT or software skills 36
Numeracy skills 34
Literacy skills 33
Other 3
Weighted base 22,013
Source: ESS, 1999
4.54 The ESS asked employers if they were about to implement new higher quality product
areas or improve the quality of their existing operations. Just over one-quarter of
engineering employers reported plans to move to higher quality product areas. The
implications of moving to higher quality product areas is that different skills will be needed,
and respondents were asked which new or additional skills would be required to do this
(Table 4.9).
4.55 Once again, the overriding importance of technical and practical skill emerges, although
we are unable to unpack the precise nature of these. However, Table 4.9 also illustrates
wide ranging requirements for additional or new skills and reflects a number of themes
identified earlier in this report. In particular, additional or new teamworking, managerial,
problem-solving, customer handling and communication skills will be required to enable
employers to improve quality.
4.56 Those with no plans to introduce higher quality product areas were asked if they had plans
to achieve greater efficiency within their existing products. Table 4.10 reports the skills
needed to achieve this greater efficiency. The pattern of need is very similar to that
illustrated in Table 4.9. However, technical and practical skills emerge as even more
important in increasing efficiency, while new or additional generic and management skills
are slightly less likely to be required.
Table 4.10: New or additional skills needed to achieve higher efficiency

51
%
Technical and practical skills (non-IT) 80
Team working skills 53
Problem solving 49
Customer handling 42
Management skills 40
Communication skills 36
Basic computer literacy 33
Numeracy skills 28
Literacy skills 25
Advanced IT or software skills 25
Foreign language skills 10
Other 5
Weighted base 29,065
Source: ESS, 1999
Appendix 1: Contributing Organisations

The following organisations contributed to the Dialogue Process in various ways:
through providing specific labour market information, making available copies of
reports, giving their views on issues, participating in the seminar and commenting on
the draft report. The authors of this report are grateful for their valuable help and
assistance in the project.
Advantage West Midlands
British Aerospace
Birmingham & Solihull TEC
Bolton Training Group
Business Link Birmingham
BMW Group
Brunel Training Group
Cambridge Econometrics
CSEU
52
Coventry and Warwickshire Chamber of Commerce
DTI
EdExcel
East Midlands Development Agency
Engineering Council
Engineering Employers Federation (EEF)
Engineering Construction Industry Training Board (ECITB)
EMTA
EPSRC
FEFC
Federation of Electronics Industries (FEI)
Frederick Wooley Ltd
Havering College
HESA
IMI
Institute for Employment Research, University of Warwick
Institute of Mechanical Engineers
ITNTO
Marconi Naval Systems
METCOM
National Federation of Engineering Colleges (NFEC)
North West Development Agency
nto tele.com
NTO National Council
One North East
PINTOG/Chemical Manufacturing and Processing
Rail Industry Training Council (RITC)
Rolls Royce Aerospace Group
South West RDA

53
Royal Academy of Engineering
Science, Engineering Maths and Technology Training Network
Skillset
Skills Unit, Department for Education and Employment
Society of Motor Manufacturers and Traders
ST Microelectronics Ltd
West Midlands Automotive Skills Taskforce
Wolverhampton Chamber & Business Link

Appendix 2: References and Data Sources

AGR (1999), Graduate Salaries and Vacancies Survey, 1999, Association of Graduate
Recruiters, Warwick
Annual Employers Survey (AES), Office for National Statistics
Dearing R (1997), Higher Education in a learning Society, Report of the NCIHE, HMSO
Dench S (1999), Engineering Training Provision in Coventry and Warwickshire,

Unpublished IES report to the Coventry and Warwickshire Chamber, 1999
DfEE (1998), The Learning age: Higher Education in the 21st century (Green paper),
response to the Dearing Report, HMSO, London
DTI/CEL/Barclays (1999), Report on research on first destinations of 1998 graduates,

DTI, London
Engineering Council (1998), Digest of Engineering Statistics 1998
Engineering Council (1999), Engineers for Britain: Digest of Engineering Statistics

1999
Engineering Employers Federation (1997), A new millennium of learning for

54 engineering, EEF, London
Engineering Employers Federation (1999), Engineering Trends, 3rd Quarter 1999, EEF,
London
Engineering Employers Federation (2000), Engineering Trends, 4th Quarter 1999 and
1st Quarter 2000, EEF, London
Engineering Employers Federation (2000), Introducing Engineering in Schools, EEF,

London
ECITB (2000), Skills Foresight for the Engineering Construction Sector, 2000 (draft),
Engineering Construction Training Board, Kings Langley
ECITB (1999), Engineering construction, Manpower requirement forecasts, Engineering

Construction Training Board, Kings Langley
Employer Skills Survey (ESS), Special runs of the survey undertaken by IES as part
of the dialogue project
EMTA/ADAPT (2000), Labour market Observatory sector reports, Engineering and

Marine Training Authority (ADAPT project), (draft)
EMTA (1998a), Views of engineering as a career, Summary report, Engineering and

Marine Training Authority/MORI
EMTA (1998b), Labour Market Survey of the Engineering Industry in Britain,

Engineering and Marine Training Authority, Watford
EMTA (1999), Skills and Training Survey of the Engineering Industry in Britain,
Engineering and Marine Training Authority, Watford
EMTA/EEF (1999), The 1999 People Skills Scoreboard for Engineering, Company
Reporting Limited, Edinburgh (also 1998 report)
FEFC (2000), Engineering Programme Review, Further Education Funding Council,

Coventry
Hanson K, Vignole A (1999), International Comparisons of HE Entrance Requirements

for Computer science and engineering graduates, London School of Economics,
Centre for Economic Performance
HESA (1999, annual) First Destinations of Students leaving Higher Education

Institutions, 1997/98, Higher Education Statistics Agency, Cheltenham
HESA (annual) Students in Higher Education Institutions, 1994/95, 1995/96,

1996/97 and 1997/98, Higher Education Statistics Agency, Cheltenham
Hogarth T, Bosworth D, Wilson R and Shury J (2000), The extent, causes, and
implications of skill deficiencies, Institute for Employment Research
IDS (1999) Management Pay Reviews (Nos 225 Nov, 219 May, 226 Dec 1999),
Income Data Services, London
IEE (1999) Salary Survey, Institution of Electrical Engineers, January 1999.
IFF (1998), Skill Needs in Britain 1998, IFF Research, London

55
Institute for Employment Research (IER) - Datapack provided by IER as part of the
dialogue process containing detailed breakdowns of projections and historical
trends relating to the engineering manufacture sector.
ITCE Skills Strategy Group (1999), Skill needs of the electronics sector, first report of
the Information Technology, Communications and Electronics Skills Strategy Group,
National Skills Task Force
ITNTO (1999), Skills 99: IT Skills Summary, Information Technology National Training
Organisation, London
Jagger N, Connor H (1998), Employers’ views on the provision of postgraduate

engineers and material scientists, IES report to the EPSRC
Labour Force Survey (LFS), UK quarterly, Office for National Statistics
Mason G (1995), The new graduate supply-shock: recruitment and utilisation of

graduates in British industry, NIESR report Series 9
Mason G (1999a), Engineering Skills Formation in Britain: cyclical and structural

issues, Research Paper 7 for National Skills Task Force
Mason G (1999b), Skills supply and demand in the ITCE industries, report to the ITCE
Skills Strategy Group, NIESR, London
Mason G (1999c), The Labour market for engineering, science and IT graduates: are
their mismatches between supply and demand? DfEE Research Brief 112
McIntosh S, Hanson K, Vignoles A (2000), Relative Wages of Computer Scientists and

Engineers in the UK Graduate Labour Market, London School of Economics and
Political Science (forthcoming)
National Information System for Vocational Qualifications (NISVQ)
OSCEng (1998), Occupational Map of the Engineering Sector, Occupational Standards

Council for Engineering, London
Prais (1989), Qualified manpower in engineering: Britain and other advanced

countries, National Institute Economic review, 127, pp. 76-83
PRIME (1998), Automotive Manufacturers Skills Study (a survey of the skill needs of
four motor vehicle manufacturers in the West Midlands). Survey sponsored by
Birmingham TEC and the DTI
REL (1999) ‘Salary Survey of Engineers’, Remuneration Economics, July 1999
Reward Group (1999) Electronics Industry Rewards, The Reward Group, August 1999
RITC (2000), Skills for the future in the railway industry (Skills Foresight Report, draft
2000)
SBAC (1998), ‘People Management in Aerospace’, The Competitiveness Challenge,

Report Summary, SBAC, London
56
SBAC (2000), The Competitiveness Challenge: The UK aerospace people management
audit 2000, Society of British Aerospace Companies, London
Senker P (1996) ‘The Development and Implementation of National Vocational

Qualifications: an Engineering Case Study’ New Technology Work and Employment,
11(2)
Senker P and Brown R (1999), Survey of Engineering Skills Shortages in the

Electronics Sector, IPRA Report to DTI
Shackleton R, Davis C, Buckley T, Hogarth T (2000), Engineering sector case study

report, (draft report to DfEE)
Sharp C, Hutchison D, Davis C, Keys W (1996), The Take-up of Advanced

Mathematics and Science Courses. Prepared for the School Curriculum and
Assessment Authority by the National Foundation for Education Research.
Steedman H, Vignoles A, Bruniaux C, Wagner K and Hansen K (2000), International

Comparisons of HE Quality: Engineering and Computer Science, Summary Report,
London School of Economics, Centre for Economic Performance
UCAS (1999 annual), Annual Report and Statistical Tables, Universities and Colleges
Admissions Service
Wilson R (2000), Projections of Occupations and Qualifications, 1999/2000.

DfEE/Institute of Employment Research, University of Warwick
Appendix 3: Additional Tables
Table A3.1: Distribution of the main groups of engineering occupations in different

industries, September 1999
SIC code Sector Professional Engineering Machine Machine

level Engineers technicians and setters, operatives and
and technologists electrical / toolmakers, assemblers
electronic fitters, etc.
technicians
(SOC 211-213, (SOC 301 (SOC 51, (SOC 84
215-219)* and 302) 520, 522) and 85)
27-35 Engineering manufacturing 159,700 30,400 304,600 283,000
15-26,36 Other manufacturing 40,000 7,400 78,700 54,300
10-14 Extraction industries
4,300 2,100 6,300 400
(coal, gas, oil, etc.)
40,41 Utilities (electricity,
10,600 2,300 8,100 0
gas, water)
45 Construction 20,200 10,200 24,700 3,100
57
64 Post. Telecomms 13,900 3,300 1,600 500
60-63 Transport 14,100 800 7,400 0
65-67 Financial services 1,400 500 0 400
72-74 Computer and
69,000 3,900 19,600 3,500
business services
75 Public admin, defence 11,500 5,900 7,200 0
80,85 Education, health 8,200 4,100 3,700 500
01-05, 50-55, The rest
15,500 9,900 58,400 13,000
90-99
All 368,400 80,800 520,300 358,700
* Software, systems and computer engineers (SOC 214) are usually classified as IT occupations and have been
excluded as they will be discussed in the ITCE Dialogue. Similarly SOC 210 (civil and structural engineers) is
excluded because it is in the construction sector Dialogue
Source: Labour Force Survey, 1999

Table A3.2: Percentage of establishments in different sectors analysed,

by size of establishment
Sector 5-24 25-49 50-249 250-499 500+

Basic metal manufacture 54 21 23 2 1
Metal products 73 15 10 1 0.1
Mechanical equipment 65 17 15 2 1
Electronics 63 15 18 3 1
Electrical equipment 59 18 18 3 1
Motor vehicles 61 14 17 4 4
Aerospace 46 15 23 7 9
Other transport equipment 71 11 14 2 2
All sectors 67 16 14 2 1
Source: AES 95 (in EMTA, 1998)
58
Table A3.3: Percentage of establishments in different sectors analysed, by region
Sector NE NW Y/H EM WM SW East L’dn SE Wales Scotland

Basic metal manufacture 2 10 13 8 32 5 7 4 7 6 7
Metal products 4 12 11 9 22 7 9 6 10 4 6
Mechanical equipment 4 12 12 10 1 8 10 6 12 3 7
Electronics 3 10 7 7 9 8 15 10 21 5 6
Electrical equipment 4 12 8 7 13 9 12 8 17 5 5
Motor vehicles 4 13 10 11 19 8 10 5 1 5 5
Aerospace 2 15 3 2 9 14 19 4 25 1 6
Other transport equipment 2 7 7 10 11 15 11 4 17 5 13
All sectors 4 12 10 9 18 8 10 7 13 4 6
Source: AES 95 (in EMTA, 1998)
Footnote: percentages do not all add to 100, due to rounding
Table A3.4: Engineering employment trends in each English region (thousands)
Years London SE East SW WM EM Y+H NW M’side NE

1971 389.6 411.5 279.7 201.3 578.6 219.4 240.4 307.6 100.9 165.4
1981 251.7 357.7 258.4 200.0 424.2 197.0 190.3 238.4 61.9 140.7
1991 117.5 250.6 194.3 160.9 322.2 146.8 150.9 185.8 40.7 83.2
1995 88.1 225.5 169.4 151.9 303.6 141.2 139.2 167.1 31.2 75.6
1998 85.4 237.9 178.8 166.4 305.4 149.9 147.6 167.6 31.0 83.3
2004 66.3 208.8 154.3 157.7 263.4 127.9 133.3 142.2 32.3 72.5
2010 55.0 193.4 139.1 154.2 246.0 119.3 129.8 127.8 34.6 70.9
Source: IER Projections, 2000
Table A3.5: Engineering employment trends in UK countries
Years Wales Scotland N Ireland England

59
1971 125.7 265.4 49.2 2894.4
1981 104.5 197.1 40.0 2320.3
1991 86.1 149.8 32.6 1652.9
1995 91.0 140.3 33.4 1492.8
1998 94.5 140.8 35.6 1553.2
2004 85.1 120.6 33.9 1358.7
2010 79.0 108.3 31.8 1270.3
Source: IER Projections, 2000
Table A3.6: Distribution of vacancies by occupation
Occupation Employers with vacancies in each Weighted base

occupation, as a percentage of (ie number of employers
those employing each occupation employing each occupation)
Managers and administrative 3 30,134
Professional 5 15,166
Technical and scientific 6 11,421
Clerical and secretarial 4 22,991
Craft and skilled operative 12 20,610
Personal service 1 1,467
Sales 6 9,451
Operative and assembly 14 13,871
Other manual 3 9,321
Source: ESS, 1999
Table A3.7: The skills that employers find it hard to find in different occupations
Managers Professional Technicians Clerical Craft Sales Operative Other

60
manual
Basic computer literacy 3 4 11 25 4 21 6 -
Advanced IT and
14 15 30 8 6 3 5 -
software skills
Other technical and
59 47 74 29 73 43 62 49
practical skills
Communication skills 36 8 9 28 11 34 12 -
Customer handling skills 16 10 9 14 4 23 1 -
Team working skills 23 8 6 5 15 17 14 -
Foreign language skills 14 4 3 1 2 15 - -
Problem solving skills 29 15 14 6 16 16 14 -
Management skills 43 13 13 2 6 23 8 -
Numeracy skills 11 2 8 16 9 12 11 8
Literacy skills 11 - 2 9 10 3 6 8
Other 3 4 8 10 15 12 13 1
No specific skills 2 10 2 4 3 1 4 7
Don’t know 18 22 14 23 9 8 18 39
Weighted base 408 481 409 369 1,913 350 1,368 149
Source: ESS, 1999
Table A3.8: Causes identified by employers of hard-to-fill vacancies by occupation

manual
Too much competition
9 6 14 6 13 10 15 3
from other employers
Not enough people interested
19 7 7 11 26 13 34 48
in this type of job
Company does not pay enough 6 6 9 16 11 12 13 9
Low number of people
42 56 45 38 50 42 40 26
with required skills
Low number of applicants
with required attitude, 18 8 8 17 14 23 20 11
motivation or personality
Low number of applicants
28 26 23 24 27 18 31 27
generally
Lack of work experience 33 21 30 7 25 40 23 12
Lack of qualifications 6 13 9 2 13 13 6 -
Company location 3 4 4 5 <1 2 3 13 61
Irregular/anti-social hours 14 14 11 3 6 4 7 -
Unattractive conditions
6 1 5 7 1 1 3 -
of work
Other - - - - 2 - - -
Don’t know - 10 9 14 5 9 3 14
Weighted base 408 481 409 369 1,913 350 1,368 149
Source: ESS, 1999
Table A3.9: Impact of recruitment difficulties in different occupations

manual
Loss of business or
24 40 43 11 43 51 33 45
orders to competitors
Delays in new product
42 56 56 20 46 42 45 40
developing
Withdrawal from
2 23 11 4 19 12 16 38
certain markets
Difficulties in meeting
customer service 51 42 56 25 60 37 63 38
objectives
Difficulties meeting
30 25 22 16 24 10 21 10
required quality standards
Increased operating costs 33 37 35 35 53 32 55 55
Difficulties introducing
28 27 33 20 26 20 21 33
technological change
Difficulties introducing
62 35 18 19 17 23 13 22 44
new working practices
None of these 2 1 2 - 1 - <1 -
Don’t know 10 9 12 49 9 15 11 34
Weighted base 408 481 409 369 1,913 804 1,368 149
Source: ESS, 1999
63

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SKILLS DIALOGUES: LISTENING TO EMPLOYERS

Tel: 0845 60 222 60

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© Crown copyright 2000

Produced by the Department for

Extracts from this document may be reproduced for

A comprehensive summary from employers of skills requirements

Executive Summary vii

2. Demand for Engineering Skills 8

3. Supply of Engineering Skills 21

4. Recruitment and Skill Deficiencies 33

Appendix 1: Contributing Organisations 52

Appendix 2: References and Data Sources 54

Appendix 3: Additional Tables 57

Skills Dialogues – General Introduction

Engineering and Marine Engineering Construction Industry

Engineering demand - a changing but diverse picture

q Engineering is a world of contrasts. It comprises one of the fastest growing and

q However, despite these downward trends overall, there will continue to be a

A change in skill needs too

q the development of the qualifications framework further, especially at NVQ

q a failure to attract enough of the right quality of young people to study

q a declining interest in taking maths and physics at ‘A’ level

q Although a number of changes have been introduced to improve engineering

q It is estimated that around one in six engineering employers have hard-to-fill

q Difficulties are greater for engineering firms in filling vacancies at engineering

q Within engineering, electronics has greater recruitment difficulties at professional

q Finally, skill deficiencies impact on engineering companies in different ways:

q There is a continuing, substantial need for training provision in engineering. Despite

Scope and main focus

Figure 1.1: Distribution of engineering employment

58% Engineering manufacturing

Source: LFS, 1999

Engineering and the economy

q Specific engineering sub-sectors are among the best performing UK industries: eg

q Engineering contributes to the success of a range of other industries in, for

q ‘Metals manufacturing, moulding and fabrication’ is identified as likely to be one of

q Electronics and telecommunications are expected to benefit from projected strong

q The UK automotive components industry is likely to face a slowdown in orders as a

q Vehicle assemblers are likely to take increasing advantage of international sourcing

Principal drivers of change

6 q Technological change - leading to a shift towards higher-level occupations and

q An increasing emphasis on customer service, and customers being more

q Globalisation - which has affected decisions by multi-national companies about the

q Flatter organisational structures, as a consequence of drives to control costs and

q Greater environmental concerns and increased safety awareness which puts

q Social pressures, for example an increasing resistance to working in jobs that

Demand for Engineering Skills

q However, 25 per cent of all engineering employees are in establishments with

q London is the location of a high proportion of engineering and other technical

2.7 A breakdown of employees in engineering manufacturing by age (EMTA, 1998) shows

q In the ESS survey in mid-1999, 44 per cent of employers in the engineering

q In the 12 months to September 1999, the EEF reported a decline in engineering

q There is surprisingly little difference apparent between engineering sectors: all

Figure 2.1: Employment in engineering, 1971-2010 (millions)

Source: Wilson, 2000

Importance of replacement demand

Managers and Proprietors

Business/Public Service Prof.

Science Associate Prof.

Bus/Public Serv. Assoc. Prof.

Admin. & Clerical Occupations

Secretarial & Related Occs.